CALGARY, Alberta – Share price for Cougar Valley Resources (CVR.TO) tumbled 37% in opening trading this morning on the TSX after the E&P announced details of its 2014 Capital program.
The Calgary-based company, renown for its forward-thinking and innovative exploration strategies, is taking a new direction under its recently appointed President and CEO, Chuck Kochbanger. In his previous roles, Mr. Kockbanger, 27, founded and operated the Goldies Oldies escort service out of Whitecourt, Alberta.
“Although I am somewhat new to the upstream oil and gas business, there’s one thing I know, and that is all about
drilling into mature areas. So I’ve changed Cougar Valley’s strategy for 2014 into one where we basically drill into, or resurrect, older fields, that are say, 50+ years old, and work them over until they are once again good to go. I have to admit, the new strategy strongly aligns to a personal choice of mine that I have fostered over the decades.”
The company’s $476M 2014 budget will focus development on key areas in the Upper Hornmeister formation in the Old Hills region. This region is renowned for its low pressure reservoir and regional shore face sandstones during the Milfonian period.
CVR concedes that production from these old wells and mature reservoirs will have lower production, but they are convinced that they know how to stimulate the old fields. The company’s lead production engineer understands that there will be a number of production challenges to overcome.
“I am quite familiar with the Old Hills region, and I expect that we will come across a number of high gas oil ratio wells in this reservoir. That in turn will likely produce a bitter and very caustic oil. Furthermore, our focus will be on drilling and optimizing vertical wells because they are much easier to get into with significantly lower completion costs and complexity. We attempted a few of those younger horizontal wells earlier this year, but they sure are tight, finicky to operate, and a bitch to maintain. Many of the wells in the area have been worked over a countless number of times through the years, which have made them fairly easy to get in and out of with large service tools designed for maximum workover and stimulation.” – Ricky Gratty, operator Q with CVR
Facilities are another major concern for the company. Preliminary reports indicate that most of the casing and tubing in the field is corroded, so they plan to use copious amounts of lubrication to get and keep the wells flowing through the aging infrastructure. Mr. Gratty continues, “The field has never taken advantage of liners, so this is an uphill corrosion battler we are facing, and the more goop we put in the pipes the easier my job is.”
In a strange operational twist, that has yet to be explained by science, 2013 pilot development projects in the Upper Hornmeister formation in the Old Hills area appeared to respond better when the work was performed by younger technical and field staff. For their ingenuity or their ‘never say quit’ attitude, it just seems to work. For this reason alone, Cougar Valley plans to lay-off all of its male staff over the age of 50, and replace them with young go-getters in their mid to late twenties.
“I just love doing this work! These old bores need some love and you know what? I like to be out here for days on end with nothing to do but tinker around with these old girls. You just speed up on this well, slow down on that well, tighten a nipple here, or fix a leaky valve there. No problem. Keeps me busy!” – Ricky
The Old Hills field has its issues however, and far beyond simple operational expertise. Cougar Valley has retained a team of lawyers to try and figure out and track down partner liability in the field. The region has been bought and sold many times over the years and keeping track of any simple ownership is a nightmare for management, as well as the AER.