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Blackbird: follow up after acquiring Alliance pipe firm capacity

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World Pipelines,

Blackbird Energy Inc. is pleased to follow up its recent acquisition of firm sales gas takeaway in the Alliance pipeline system to the Chicago gas market by executing a Letter of Intent (LOI) with a third party for the transportation and processing of sour natural gas produced from its condensate-rich Elmworth project. This critical step of establishing transportation and processing evolves Blackbird from an explorer to a producer.

Blackbird and the third party expect to execute a firm gas handling agreement (GHA) in the near term, of which all terms have been established and agreed upon within the LOI. The LOI terms negotiated encompass both firm transportation to the third party's sour gas plant and the processing of 6 million ft3/d of natural gas and associated liquids from Blackbird's Elmworth project.

Blackbird's recently announced 2-20 middle Montney well, which tested at a restricted rate of 1768 boe/d (comprised of 6.8 million ft3/d and 641 bpd of liquids), has given Blackbird's management the confidence to enter into a transportation and sour natural gas processing agreement and to construct the required infrastructure for Blackbird to achieve production. The commencement of transportation and sour natural gas processing is expected to occur on or before 1 January 2017, with commencement available on 1 November 2016 subject to certain third party facility enhancements and regulatory approvals.

The third party natural gas transportation tie-in point is 3.8 km (2.4 miles) south of Blackbird's battery site. Blackbird is currently in the late stages of its infrastructure engineering and design process. Blackbird's infrastructure solution will include a battery, a pipeline gathering system and a water disposal system. This pipeline gathering system will accommodate the future development of up to 75 de-risked well locations with minimal incremental expansion costs. Blackbird's infrastructure solution is scalable and able to support future production growth.

With its recently announced acquisition of firm sales gas take-away to the Alliance Chicago Exchange, the near term execution of the GHA and the imminent construction of its infrastructure solution, Blackbird will achieve its goal of transitioning from an explorer to a producer and will then proceed with the execution of its growth objectives at its condensate-rich Elmworth project.

Edited from source by Stephanie Roker

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