Peace River project steams ahead
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Oilsands company Deep Well takes advantage of low costs
From page B1 CALGARY — Despite the collapse in global oil prices, a micro-cap oilsands company has decided to push forward with a project near Peace River while the cost of oilfield services and engineering work is low.
DAVID HOWELL/ EDMONTON JOURNAL
Curtis Sparrow, CFO of Deep Well Oil and Gas, says he believes in “buying snowshoes in the summertime.”
“I’m a firm believer in buying snowshoes in the summertime,” Deep Well Oil and Gas Inc. chief financial officer Curtis Sparrow said Tuesday. His company announced it would begin front-end engineering and design work on a small steam-based oilsands project immediately.
The price for such work has dropped precipitously along with the fall in global oil benchmarks, as larger operators have demanded a 30-per-cent cut in service costs to offset the 50-percent drop in oil prices since June 2014. The West Texas Intermediate benchmark price closed Tuesday at $53.29 US per barrel, up $1.38.
“When we did our drilling program in (the downturn of) 2008/2009, within a month people were pulling back and getting out of drilling contracts,” Sparrow said. “We pushed ahead and all of a sudden we could negotiate various services down.”
Deep Well, headquartered in Edmonton but listed on a small exchange in the United States, has previously drilled a steam-assisted gravity drainage well pair on its acreage near Peace River and was monitoring oil production from the well to determine the viability of drilling additional wells.
After posting strong production results, and thanks to better-priced oilfield services, the company now says it will go ahead with plans to drill roughly a dozen more wells into the area’s oilsands formation, where larger companies like Shell Canada Ltd. and Baytex Energy Corp. also operate.
