Blackbird Energy Inc.
TSX VENTURE : BBI

Blackbird Energy Inc.

February 21, 2017 03:00 ET

Blackbird Energy Announces Non-Binding Nomination for 90 Mmcf/d of Natural Gas Processing by 2021, Initial Production Figures, and Team Additions

CALGARY, ALBERTA--(Marketwired - Feb. 21, 2017) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWS SERVICES OR DISSEMINATION IN THE UNITED STATES

Blackbird Energy Inc. (TSX VENTURE:BBI) ("Blackbird" or the "Company") is pleased to announce that it has entered into a non-binding letter of nomination (the "Nomination") with a premier midstream company (the "Midstream Company") for the transportation and processing of natural gas and condensate produced from certain of Blackbird's Pipestone / Elmworth lands. Blackbird is also pleased to announce initial Pipestone / Elmworth production figures and team additions commensurate with Blackbird's growth plans.

Non-Binding Nomination for 90 MMCF/D of Processing Capacity by 2021

The Nomination contemplates that the Midstream Company will transport Blackbird's natural gas and condensate produced from certain of its lands located both north and south of the Wapiti River to the Midstream Company's proposed gas plant (the "Plant") located south of the Wapiti River, where it will then be processed to market specification.

Blackbird and the Midstream Company have agreed that they will work in good faith towards executing a binding gas handling agreement ("GHA") in the coming months. The GHA will be conditional on: (i) the Midstream Company sanctioning the construction of the Plant, (ii) the Midstream Company building a pipeline gathering and compression system from the Plant to certain of Blackbird's lands both north and south of the Wapiti River, and (iii) on Blackbird obtaining coinciding take-away service from the Plant.

The natural gas processing volumes contemplated in the Nomination are as follows:

Date Volume of Natural Gas
April 1, 2019 to December 31, 2019 30 mmcf/d
January 1, 2020 to June 30, 2020 40 mmcf/d
July 1, 2020 to December 31, 2020 50 mmcf/d
January 1, 2021 to June 30, 2021 70 mmcf/d
July 1, 2021 to April 30, 2029 90 mmcf/d

Garth Braun, Blackbird's Chairman, Chief Executive Officer and President stated: "The Nomination secures material processing capacity for Blackbird and allows us to work towards a binding GHA with a premier Midstream Company. Upon execution of the GHA, Blackbird will have the ability to achieve significant production growth over the coming years. Blackbird will also continue to work diligently to access additional processing capacity in the near-term in order to achieve additional cash-flow and to accelerate our development plan moving forward."

Initial Production at Elmworth / Pipestone

As previously announced, Blackbird achieved initial production from its Elmworth / Pipestone Montney asset on January 30, 2017. On and following January 30, 2017, Blackbird began to phase-in the production from its wells located at 05-26-070-07 W6M ("5-26"), 02-20-070-07 W6M ("2-20"), 02/2-20-070-07 W6M ("102/2-20"), and 06-26-070-07 W6M ("6-26") (the "Ramp-Up Period").

On February 13, 2017, the third party facility that processes Blackbird's natural gas was temporarily shut-down due to a mechanical failure. Due to this failure, Blackbird's Ramp-Up Period was suspended. The third party plant is expected to start-up again on approximately February 23, 2017, at which time Blackbird will resume the Ramp-Up Period.

Blackbird has limited production data available for its wells on an individual basis because each well was flowing for a varying number of hours per day, each well was choked back to varying degrees per day and per hour, and all wells are still in varying degrees of clean-up. For these reasons, Blackbird believes that providing individual well data at this time would not be reflective of individual well performance over longer production periods. Blackbird will provide individual well performance at such time that IP30s, IP60s, and IP90s are obtained for each well.

See Figure 1 below for an approximation of the number of hours that Blackbird's wells were flowing each day during the initial Ramp-Up Period.

Figure 1 - Approximation of Flowing Hours and Days for Each Well

http://www.marketwire.com/library/20170220-1086341_800.jpg

Figure 2 below shows the natural gas and condensate produced each day up until the Ramp-Up Period was suspended.

Figure 2 - Blackbird's Production during Initial Ramp-Up Period

http://www.marketwire.com/library/20170220-1086341Fig2_800.jpg

Blackbird's February 12, 2017 production was approximately 5.5 mmcf/d of natural gas plus 850 bbls/d of condensate/oil and 171 bbls/d of natural gas liquids, which totals approximately 1,938 boe/d (53% liquids). On the last day prior to suspension of the Ramp-Up Period, H2S levels were at approximately 5.5%, which is under Blackbird's contracted amount of 6.0%.

Garth Braun added: "The production achieved during the initial Ramp-Up Period is in-line with our internal expectations, as we believe it will take at least one month to normalize the production of our wells and the operation of our battery and pipeline gathering system. Based on the production achieved during the Ramp-Up Period, it is Blackbird's expectation that the productive capability of the four wells which were produced during the Ramp-Up Period will meet and/or exceed our current processing and take-away capacity. With an average condensate gas ratio during the Ramp-Up Period of approximately 187 bbls/mmcf plus natural gas liquids of approximately 31 bbls/mmcf (for total liquids of 218 bbls/mmcf), we are encouraged by the liquids rates seen during the Ramp-Up Period. We are equally encouraged by the H2S levels, which were at approximately 5.5% on the last day of production. Blackbird looks forward to providing longer-duration production data as soon as it becomes available. With confirmation of liquids content, H2S levels and overall productivity during the Ramp-Up Period, Blackbird has entered into the Nomination and secured the volumes required for growth. We will now work with the Midstream Company to finalize the GHA for the benefit of both parties."

Team Additions Commensurate with Blackbird's Growth Plans

Blackbird has hired two key team members to support its long-term business plan.

In December, 2016 Blackbird hired Paul Goodman as the Company's Manager, Completions and Production. Paul has over 28 years of experience in stimulation and completions focused on unconventional resource plays. Paul was previously responsible for multi-pad completions programs and the business line aspect of fracturing operations targeting unconventional reservoirs in the Alberta Montney. Paul has been part of teams at Encana, Sanjel and Halliburton.

In February, 2017 Blackbird hired David Mills as the Company's Manager, Facilities Engineering. David is a Professional Engineer with over thirty years of varied oil and gas experience. Prior to joining Blackbird, David was responsible for the design, construction and start-up of Mosaic Energy's Kakwa / Jayar 50 mmscf/d sour and liquid stabilization gas plant, gathering system, and wellhead facilities. Prior to Mosaic Energy, David was responsible for the design, construction, start-up and expansion of Crew Energy's Septimus 60 mmscf/d sweet gas plant, gas gathering system and wellhead facilities. Prior to these companies, David held senior positions with Canetic Resources, ConocoPhillips, Imperial Oil and Qatar Liquefied Gas Company.

Garth Braun stated: "Paul and David are key additions for Blackbird as we enter the next phase of our development. Paul's expertise in completions will allow Blackbird to execute on large-scale, multi-well pad completion programs while reducing completions costs and maximizing expected ultimate recovery. David's expertise will be invaluable as we expand our pipeline gathering system and infrastructure facilities both north and south of the Wapiti River, thereby unlocking the potential of Blackbird's Pipestone / Elmworth asset."

About Blackbird

Blackbird Energy Inc. is a highly innovative oil and gas exploration and development company focused on the condensate and liquids-rich Montney fairway at Elmworth, near Grande Prairie, Alberta.

For more information please view our Corporate Presentation at www.blackbirdenergyinc.com.

Advisories and Forward-Looking Information

This press release contains forward-looking statements or information (collectively referred to herein as "forward-looking statements"). Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements and are not guarantees of future performance of the Company. Such forward-looking statements include but are not limited to statements regarding the execution of a GHA, the sanctioning of the Plant, the construction of a pipeline gathering system to Blackbird's lands, the ability for Blackbird to obtain natural gas take-away coinciding with its processing commitments, the future production of Blackbird's wells, reducing completion costs, maximizing expected ultimate recovery, condensate gas ratios and H2S levels. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management's current views and are based on certain expectations, estimates, and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a downturn in general economic and business conditions in North America and internationally, (2) the inherent uncertainties and speculative nature associated with oil and gas exploration, development and production including drilling and completion risks, (3) the price of and demand for oil and gas and their effect on the economics of oil and gas exploration, (4) any number of events or causes which may delay or cease exploration and development of the Company's property interests, such as environmental liabilities, weather, mechanical failures, safety concerns and labour problems, (5) the risk that the Company does not execute its business plan, (6) inability to retain key employees, (7) inability to finance operations and growth, and (8) other factors beyond the Company's control. Should one or more of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. Readers are cautioned that the foregoing list of risks, uncertainties, and other factors is not exhaustive. Unpredictable or unknown factors not discussed could also have material adverse effects on forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are dependent on other factors, and the Company's course of action would depend on its assessment of the future considering all information then available. All forward-looking statements in this press release are expressly qualified in their entirety by these cautionary statements. Except as required by law, the Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

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