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Gas Supply Study Supports Investment Decision

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Canada / 2016 / Strategic Advisory

Analysis helps manage long-term investment risk

Identified potential in several formations

Break-even analysis reduced uncertainty

Forecasts support investment decision

Challenge

  • A client was considering investing in a company that provides natural gas compressors to an area supplied by Cardium and Spirit River natural gas
  • The client required information regarding the economic viability of future development in the area before making a major investment decision

Solution

  • Experts identified the undeveloped potential in each formation and estimated the production profiles for future wells
  • The economic viability, including break-even analysis, of future development was assessed
  • Using a base production forecast plus expected future drilling, Sproule created a forecast of the drilling activity required to keep the compressors operating at capacity
  • The forecast was then compared with historical drilling activity to provide insight as to the likelihood of this development pace being achieved

Value

  • The supply study provided the client with the necessary analysis and insights to make a more informed investment decision
  • The client was able to compare the analysis of an independent third party to information provided by producers in the area, and was able to determine that there was enough future production potential to justify the investment