Journey Energy Inc. ("Journey" or the "Company") is pleased to provide an update on its Duvernay Joint Venture (the "Joint Venture") operations, including the excellent initial test rates achieved by the first two wells.
Duvernay Joint Venture Operational Update
On May 7, 2024 Journey announced its participation in a 128 section, Joint Venture in the Duvernay. Journey's current working interest in the Joint Venture is 31.38%. The partners currently control 104 sections.
Two Joint Venture wells have been drilled to date from the 05-18-042-03W5 surface location. The 03-26-042-04W5 well has a stimulated lateral length of 3,511 meters and was completed with 71 stages involving 6,395 tonnes of sand. The 09-05-042-03W5 well has a stimulated lateral length of 3,650 meters and was completed with 74 stages involving 6,582 tonnes of sand. Both wells were tied into the Journey operated gas processing facility at 01-04-042-03W5 and began flowing through testers on November 25, 2024. Individual well drilling and completion costs (excluding testing and surface facility costs) are projected to be well below the originally estimated costs.
The above production rates continue to significantly exceed internal type curve expectations which were originally based upon the initial wells drilled and completed in 2019 by another operator. Both wells continue to be restricted.
Although these represent preliminary results, and comparisons with the original wells on the Joint Venture will be more representative in late January after 60 producing days, current oil flow rates are materially better than the flow rates of the original wells drilled in 2018 and 2019. This result has prompted an increase in Journey's type curve expectations for Duvernay wells with a stimulated lateral length of 3,600 meters. The new type curve features a small increase in recoverable reserves, but a more substantial increase in initial productivity rates. Because of this, Management expects this to result in a corresponding increase in the rate of return, and a decrease in the payout period from the on-production date. Shareholders are directed to Journey's December corporate presentation for updated type curves.
Journey's share of expenditures for the first two wells were primarily funded through the closing of the financing on March 20, 2024. Initial gross capital expenditures for the Joint Venture are capped at gross amounts of $30 million for 2024 and $100 million for 2025. The cap on expenditures can be increased by mutual agreement of both parties. The first two wells are strategically located to satisfy drilling commitments for the retention of freehold lands. The position of the wells is expected to allow for the booking of approximately 40 gross (12 net) additional proved plus probable offset locations in Journey's 2024 year-end reserve report.
Management believes they have found a quality Joint Venture partner to help benefit from the economies of scale while minimizing the risk of single events on the Company's business plan. Journey's working interest position in the Joint Venture is enough to support 60 net 2.5 mile wells on azimuth locations.
Future Update and Further Information
Journey's preliminary plans for the Joint Venture in 2025 are to participate in 6-8 wells (1.8-2.4 net). The majority of these locations will be drilled from three well pads in order to maximize operational efficiencies and minimize well costs. Journey plans to provide additional production data, full year capital, production, and adjusted funds flow guidance, and its funding plans toward the end of January 2025 as capital phasing and on-stream dates are currently being refined by the partners.
Journey management views 2025 as a pivotal year for the company as the groundwork laid in previous years begins to materialize. Journey's management remains focused on long-term value creation for all stakeholders and are available to address shareholder inquiries upon request.