THE SANDBOX: FEBRUARY CSS & SAGD DATA . .
CVE/COP’s Christina Lake SAGD project production averaged 132 MBbl/d in February, or over 2 MBbl/d higher than January.This is another new record as Phase E, which commenced production in July 2013, ramped up. We believe it is essentially at its design rate capacity of 40 MBbl/d gross. Of note, this is also within CVE’s target range of 124-136 MBbl/d gross for FY2014.The project continues to demonstrate a best in class SOR, which averaged 1.9x and is at the low end of CVE’s 1.9-2.1x target for FY2014.
CVE/COP’s Foster Creek SAGD project production. While Foster Creek volumes remained essentially flat at 108 MBbl/d, the SOR increased to 2.75x from 2.63x. This is all associated with risks we pointed out in our recent downgrade note (LINK)
CNQ’s Primrose CSS project. Primrose volumes rose by 14.7 MBbl/d MoM to 67.8 MBbl/d. The increase in February is a surprise to us, because as mentioned in our Sandbox note from last month (LINK) per a discussion with the company, a new production cycle commenced sometime in late February at Primrose North and most of Primrose South, where the company currently isn’t steam restricted. As a result, we had expected to see a large production ramp up revealed in the March numbers (and not in February). March production could be a key share-price catalyst as a result.
CNQ’s Kirby SAGD project (commenced first steam in September 2013) averaged 3.4 MBbl/d in February, and according to management, the project was producing 7 MBbl/d at the time of CNQ’s recent Q4 conference call (3/6/14). To that end, and as shown in Figure 5, the ramp up of production as of February is close to our type curve forecast.
MEG’s Christina Lake SAGD project production continues to reach new highs, averaging 60.2 MBbl/d in February, which is up 4.5 MBbl/d MoM. Additionally, the SOR fell to 2.51x from 2.60x due to the continued ramp up at Phase 2B. There are a couple of things to point out given there is still more production increases expected over the course of the year as Phase 2B continues to ramp up (recall Phase 2B is 35 MBbl/d on top of the prior 35 MBbl/d capacity): 1) Bloomberg consensus is calling for production in Q1/14 to average 55 MBbl/d (we are at 57 MBbl/d). Quarter to date, production has averaged ~58 MBbl/d, which is compelling us to take a second look at our estimate. 2) Production in February has already hit the low end of MEG’s 60-65 MBbl/d guidance for the year. Albeit, there is a scheduled turnaround in May for Phases 1 through 2A (not 2B) that is expected to last about three weeks and impact total production by an estimated 37 MBbl/d (this is factored into guidance). Nevertheless,this is a bullish number.
SU’s Firebag SAGD project averaged 168.6 MBbl/d in February, up over 15 MBbl/d MoM. Recall that December and January production was affected by rationing of natural gas to the project, and that February was also affected albeit to a lesser degree.
SU’s MacKay River SAGD project decreased 36% from 24 MBbl/d in January to 15 MBbl/d in February. Per the company, there was some maintenance at the end of January and early February (4 weeks), resulting in the two consecutive MoM declines.However, the SOR decreased from 2.79x in January to 2.62x in February.
See Figures 1-6 for more details of the aforementioned projects as well as other projects.
More....8 pages
research.canaccordgenuity.com |
