Market Context: Whitecap-Veren Merger Combines Different Technical Approaches
The $15-billion merger of Whitecap Resources Inc. and Veren Inc. brings together two of the largest operators in the Alberta Montney, with a combined footprint of 975,000 gross acres, along with 127,000 boe/d of production.
Approximately 18 per cent of all wells drilled in the Alberta Montney since the start of 2023 were drilled on the companies’ acreage, either by Whitecap or Veren, or by operators acquired in the last two years (see map above, courtesy of gDC Cloud.)
Veren built its 365,000 contiguous gross acres, all in the volatile oil window, through the acquisition of Spartan Delta’s assets in the second quarter of 2023, followed by the acquisition of Hammerhead Resources in late 2023.
Since then, it has been refining its drilling and completions design to enhance productivity and overall returns across its four core areas: Gold Creek West, Gold Creek, Karr North and Karr South.
Whitecap built its Montney land position of 627,000 gross acres at Kakwa, Musreau, Lator and Resthaven through a series of acquisitions, including buying XTO Energy Canada’s assets in 2022, which came with slightly under 600,000 gross acres.
Operators take different completions approaches
Each company’s technical teams have taken different approaches to developing their unique Montney assets, with both having strong production results.
There has been much more activity on Veren’s acreage in the last two years, with 133 Montney oil wells drilled compared to 37 wells spud by Whitecap targeting condensate/liquids-rich gas production.
Data Analytics in geoSCOUT shows Veren has tested a variety of completion designs to extract more value from its assets, while Whitecap has taken a more measured approach.
Veren completed wells with lateral lengths ranging from slightly under 2,000 metres to over 4,000 metres in 2024. Whitecap’s lateral lengths were more consistent, at approximately 3,000 metres. However, average Whitecap lateral lengths were higher than for Veren.
The box and whisker plot below shows the differences in lateral lengths completed by both companies.
The box represents the interquartile range, with the lower and upper edges of the box marking the first and third quartiles, respectively. The median is indicated by the line within the box, with the mean lateral length represented by the dot. The “whiskers” show the maximum and minimum lateral lengths.
Veren has also experimented with a wide range of proppant tonnage for wells with similar lateral lengths, in general, placing more sand per well than Whitecap with some outliers on the lower end. Whitecap has followed a more consistent sand concentration per metre pumped.
There was a similar pattern with respect to fluid pumped with Veren generally on the higher side of fluid pumped per metre with some low fluid intensity wells.
Veren had a wide range of frac stage counts per well due in part to its mix of plug-and-perf (P&P) and single-point entry (SPE) completions. Whitecap stage counts vary only slightly with nearly all of its wells being P&P wells.
Veren tested P&P technology at its Gold Creek asset in 2024, but wells underperformed.
The company brought onstream two multi-well pads in the Gold Creek area, with average peak 30-day rates of 600 to 900 boe/d per well (60 per cent light oil, 10 per cent NGLs), and recently brought onstream two additional multi-well pads that have been flowing for less than 30 days, using the P&P design.
These wells are economic and were completed at a lower cost than wells completed using the SPE design in this area, Veren said.
However, Veren added, production has underperformed the SPE-completed wells, which generated an average peak 30-day rate of 1,200 boe/d per well in 2023.
The company’s development plan, as reflected in its revised 2024 guidance, 2025 guidance, and the five-year plan, incorporates the use of SPE design in the Gold Creek area.
The number of cluster/intervals (including each perf cluster or port as an interval) also varied between operators, with the Veren wells pumping into a higher number of entry points per well than Whitecap.
Liquids production strong across combined acreage
Both Veren and Whitecap wells reported strong average cumulative liquids production in their first six months of production, across both the volatile oil window and into condensate/liquids-rich areas of the Montney in 2023-2024.
Not surprisingly, given the greater variation in Veren completion designs, its wells have seen greater variation in cumulative production in their first six months online.
Whitecap’s Kakwa condensate-rich wells recorded the highest average six-month cumulative liquids production, coming in at slightly over 117,400 bbls. Veren’s Elmworth oil wells averaged almost 100,000 bbls of cumulative liquids production.
But the top seven Veren oil wells reported six-month cumulative liquids production ranging from over 196,000 bbls to as high as almost 280,000 bbls.
Whitecap’s Kakwa wells reported an average first six-month cumulative production of slightly over 187,000 boe, with Veren’s Elmworth wells reporting production of approximately 147,000 boe.
But once again, Veren’s top wells reported much higher production, ranging from 276,000 boe to over 340,000 boe.
Bench development next phase of productivity improvement
Veren and Whitecap have both been advancing bench-style development on their Montney acreage.
Veren has been developing its well designs specific to the geology at its core areas throughout the volatile oil window, said vice-president of geoscience Mike Blair at its most recent investor day.
“The geology at Gold Creek and Karr is different,” said Blair, and “we needed to understand the differences.”
“Porosity and permeability increase to the northeast in the volatile oil window while the pressure increases to the southwest,” said Blair. The Karr assets are slightly over-pressured, similar to nearby Kakwa condensate development.
The Gold Creek assets are normally pressured but have higher porosity and permeability than seen at Karr. This variation in porosity and permeability allows for oil to flow at very economic rates, even in a normal pressure gradient regime.
Drilling is focused on the Middle Montney, which Veren breaks into three different benches. The company has developed two different exploitation strategies based on its technical analysis, said Blair.
At Gold Creek, Gold Creek West and Karr East, where the reservoir has higher porosity and permeability and normally pressured, wells are targeted at the base of the Middle Montney. This single bench development is possible because pore pressure decreases upward, regardless of geologic variability, allowing the frack to grow upward reaching the Top Montney, said Blair.
Karr West has the highest original oil in place and highest oil saturation of Veren’s Montney assets. In this over-pressured area, as pore pressure increases in higher porosity zones, vertical frack growth is limited, supporting multi-bench development, said Blair.
Whitecap has also been testing the multi-bench approach across its core areas.
At Musreau, its multi-bench well configuration is outperforming long-term production expectations by approximately 20 per cent, Joey Wong, vice-president, West Division, said on the company’s year-end 2024 earnings call.
At Kakwa, meanwhile, the company drilled its first triple bench pad in 2024, which was designed to evaluate the potential of the D2, D3 and Lower Middle Montney formations. Results are pending.
Earlier stage developments show promising results
Prior to the merger, both Whitecap and Veren had earlier stage development projects underway, with positive production results.
At Lator, Whitecap drilled two delineation wells on the eastern and southern portions of its acreage in 2024 to assess the Montney deliverability and liquids content across its roughly four townships of Montney rights.
The first well, 13-21, achieved an IP120 rate of 1,265 boe/d, of which 41 per cent is liquids, including 442 bbls/d of condensate.
The second well, at 13-35, with 85 days of production, is tracking a projected IP90 rate of just over 1,600 boe/d, of which 24 per cent is liquids, including just over 250 bbls/d of condensate.
“Also of note, the condensate-to-gas ratios on both wells were higher than our initial expectations for each specific area, which is positive for the overall economics of this asset,” said Wong.
Karr East is the most underinvested area in Veren’s Montney portfolio, said Blair. “It was drilled before 2017, before modern frackking technologies.”
The opportunity at Karr East is in implementing the company’s current elevator well designs that include longer laterals, more stages and tighter spacing, and increased frack intensity with more proppant and fluids, he said.
While the previous operator drilled lateral lengths of approximately 1,700 metres, Veren is targeting an average of 2,800 metres. It is tripling proppant loads to three tonnes/metre, and increasing fluid intensity by over seven times to 15 m3/m, said Blair. It is forecasting EURs over 750,000 boe with modern completions technologies.
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