Strathcona operations poised for growth

Strathcona Resources Ltd is reporting a decrease to its production in the third quarter.

Strathcona’s third-quarter production decreased to 178 Mboe/D (thousand barrels of oil equivalent per day). The decrease was driven by regularly scheduled turnarounds at Strathcona’s thermal assets and production curtailments in the Montney in response to low gas prices and third-party gas plant turnarounds.

In the third quarter, Strathcona signed a definitive agreement to purchase the Cold Lake transmission system (CLTS) from Campus Energy Partners for an aggregate purchase price of $40 million.

The CLTS provides the majority of fuel gas used to create steam at Lindbergh and Orion, while also transporting natural gas to several third-party customers.

In Cold Lake, Strathcona’s focus remains the drilling of four-well pair G4 pad in Orion, targeting the Upper Grand Rapids formation, and eight-lower drainage wells on the D-East pad in Tucker.

The pads are expected to add five MBBLS/D or five thousand barrels per day at a capital cost of approximately $60 million. It will also reduce the Cold Lake division’s steam-oil ratio by approximately five per cent.

In Lloydminster, production at Strathcona’s thermal assets was impacted by regularly scheduled quarterly turnarounds in Meota, Sask.

Following several years of focusing on delimitation Meota is now poised to make 50 mbbls/d by 2030.

“We are going to be constructing our first brand new facility in this area, this is a large project that we’re working on. It’s a 12,000 barrel-a-day facility,” said Ryan Tracy, president, SCR Lloydminster Thermal.

Tracy says the facility will be ready by 2026 before they jump to their next one.

“We are going to basically duplicate that facility because the resource size is so large,” he said, “Building another facility there (Meota) it’ll be on stream in 2029.”

Seamus Murphy, president, SCR Lloydminster Conventional says there’s still plenty of oil to get.

“Only pulled four per cent of the oil out of the ground, we have six per cent booked,” said Murphy. “The key message is, there’s a lot of oil in the ground and our fields continue to get bigger.”

He says the technology is improving and it’s benefitting the company.

“Our assets benefit from a massive resource in place and continuous increments and improvements in technology equate to large increases in reserves,” said Murphy. “We continue to increase our reserves year-over-year.”

Strathcona tied in 30 new wells including its first multi-lateral well targeting the Mannville stack.

The Mannville stack is also performing quite well according to Strathcona.

The company says early results are promising with the multi-lateral well achieving 300 barrels per day.

Strathcona’s board of directors has approved a 2025 capital budget of $1.35 billion with production guidance of 185 to 195 Mboe/D.

They say there’s an opportunity to add roughly 105 Mboe/d over the next six years.

“We think there’s an opportunity to grow production,” said Adam Waterous, executive chairman, Strathcona and managing partner & CEO, Waterous Energy Fund/

“The main focus is organic growth over the next half dozen years,” he said.

Waterous says the oil side of operations are growing fast.

Strathcona employs 783 people.

“We’re growing our oil business faster than our natural gas business, we’ve grown oil by nine per cent,” he said.

“We’re looking for long-term shareholders, our shareholders have mostly been with us for the last eight years. What we are looking to do is use the same value investing approach and make the same decisions on organic growth.”

Waterous says the entire oil and gas sector is undervalued.

Strathcona has 783 employees with operations in Montney, Cold Lake and Lloydminster.