Rubellite Energy : Energy Gemstone

Newly-formed Rubellite Energy is the latest jewel in the Clearwater crown, as President and CEO, Sue Rose, informs us.

INTRODUCTION

Unearthed in July 2021, Rubellite Energy (Rubellite) is a true gem.

This new, pure play Clearwater oil company was created last year by Perpetual Energy (Perpetual), an active player in the Canadian oil and gas industry for close to two decades.

Over the past four years, Perpetual had accumulated a material land position in the exciting, emerging Clearwater oil play in eastern Alberta, where it is well-capitalized to deliver on its ambitious growth plan.

Rubellite raised close to $83 million in equity capital in October to close the acquisition of the Clearwater assets from Perpetual, and fund an initial drilling program to delineate and develop established pools and also test several exploratory prospects.

The company has also been successful in expanding its land base and location inventory through bolt-on land purchases in its core operating areas, and negotiating access to additional exploratory lands across the Clearwater play fairway.

“A large inventory of potential drilling locations in the Clearwater play have been identified and captured by Rubellite,” begins Sue Rose, President and CEO of Rubellite.

“We have a robust, organic growth plan, investing capital into the drill bit to increase production, reserves, cash flow and value for shareholders.”

DRILLING PROGRAM

Through a management services contract with Perpetual, Rubellite hit the ground running with an experienced team to drive its exploration activities, optimize the development of its Clearwater assets, and produce and market its heavy oil.

As Clearwater formation occurs at relatively shallow depths of 450 to 800 meters, the opportunity to produce heavy oil from these unconventional reservoirs has been unlocked by innovative new multi-lateral drilling technology.

“From a single wellbore, generally six to eight legs are drilled horizontally, opening up close to 10,000 meters of fine-grained sandstone reservoir for production,” Rose explains.

“At current oil prices, rapid payouts on the modest capital investment per well translates to high rates of return, ranking this play amongst the most economically viable in North America.”

With access to capital firmly in hand, the drilling program was launched to follow up on the seven successful wells that grounded Rubellite’s initial production base at inception.

Three core areas, namely at Marten Hills, Figure Lake, and Ukalta, were targeted in Rubellite’s initial drilling program, which launched last summer.

“Production was established at Marten Hills with two drills in early July. The rig then moved south and four exploratory wells were drilled on two separate pad sites, targeting to establish production across the large, contiguous land base assembled in the Figure Lake area and delineate the economic development potential,” states Rose.

“From there, the planned drilling program shifted to the development of the proven Clearwater zone in the Ukalta area at the southern end of the Clearwater play fairway.”

As strong initial production rates were established from two wells on the south pad at Figure Lake, Rubellite contracted a second rig to follow up on its success. Four additional wells have since been drilled in the area, and have recently been placed on production.

“Once the wells get through their initial oil-based mud recovery period, sales production rates will be closely monitored to refine expected type curves and inform future development plans,” Rose outlines.

Meanwhile, a continuous development drilling plan at Ukalta remains ongoing, and production is growing quickly as new wells are drilled and placed on production. As a result, Rubellite expects to hit its 2,000 bbl/d heavy oil sales milestone late in the Q1 of 2022.

In addition to investing in development drilling, capital will be allocated over the next 12 months to continue to execute its land capture strategy and to fund exploratory drilling in several of these new areas.

SAFETY AND EFFICIENCY

Rubellite’s capital activities are executed through the management of a network of highly skilled, reliable partners and suppliers.

“Multi-well pad sites are built to host concurrent drilling and production operations, so they require significant coordination,” elaborates Rose.

“We have forged strong relationships that we can depend on for safe and efficient operations, through from padsite construction, drilling operations, wellbore equipping, and the installation of our permanent production facilities.”

Complete with two fully-trained crews carrying out drilling operations on a 24/7 basis, Rubellite is currently running a pair of Precision Drilling (Precision) rigs that directly and indirectly employ close to 100 people and are well-suited to its multi-lateral drilling techniques, utilizing an oil-based mud system to minimize reservoir damage.

“Using Secure Energy Services’ (Secure) innovative Enviromax system, we are cleaning our drill cuttings on-site and reusing the oil-based mud on a continuous basis,” says Rose.

Further, wellsite geologists work closely with the directional drillers to optimize the placement of the lateral legs, steering continuously and reacting to reservoir changes encountered by Rubellite.

“Experienced and talented drilling superintendents keep this complex operation running like clockwork, working to reduce drill times, minimize mud losses and formation damage, and drive ever-better capital efficiencies.”

Safety is job number one at Rubellite, and the company has a track record of excellence in this regard thanks to its management service agreement with Perpetual and a field operations team that is committed to a comprehensive health and safety management system.

Rubellite’s independent board of directors oversee its environment, health and safety programs, striving for ‘triple zero performance’ – zero spills, zero injuries, and zero vehicle incidents.

“Through the cost-effective management service contract with Perpetual, almost 50 employees and contractors in our Calgary head office and in the field operate Rubellite’s assets with a focus on safety first,” Rose emphasizes.

REDUCING EMISSIONS

With strong balance sheets, unprecedented collaborations and innovative solutions driving ever-cleaner operations, responsibly produced Canadian oil and natural gas is poised to play a greater role in the global energy mix.

“The Canadian oil and gas sector is up for the challenge and excited to be part of bringing ever-cleaner and much needed energy to society, improving the lives and livelihoods of Canadians and helping to build prosperity in emerging economies throughout the world,” affirms Rose.

The Clearwater play is the poster child for environmentally-responsible heavy oil production, with a minimal surface land footprint for as many as eight wells, each with six to eight laterals, reaching as far as a mile away in every direction.

No fracture stimulation is required in the Clearwater play, with the multi-lateral drilling technology and oil-based mud system eliminating the need to use any fresh water.

“Solution gas is used to fuel production and oil treating facilities, and we are currently working on a low emissions pad site battery design to further reduce emissions,” Rose shares.

“Looking forward, our consolidated land position presents pipeline tie-in opportunities to reduce and perhaps eliminate the trucking of oil to sales terminals.”

UNLOCKING VALUE

In 2022, Rubellite plans to deliver a robust, organic production growth profile to unlock free funds flow. As the company hits its stride with its continuous drilling program, learnings will be applied to drive increasingly stronger capital efficiencies.

“Investing through the drill bit is expected to materially grow our heavy oil reserves and inform type curves to refine expectations from our extensive drilling location inventory,” Rose says.

“Exploration will continue to be front and center for the coming year, and capital will be deployed to capture additional opportunities and expand our acreage and prospect inventory.”

Coming off a busy period of corporate consolidation in the Canadian sector, growth-focused start-ups such as Rubellite are a rare find, almost as rare as the gemstone itself.