While Veren’s plug-n’-perf trials were ill-timed, they were not an irresponsible approach to asset stewardship. Success would have led to a large increase in Gold Creek NPV through >$1Bn in capital cost savings over the lifetime of the project. While many will mistake this completions step-change as a geological failing, we are extremely confident that NCS completions will deliver strong results on a go-forward basis. These wells do not change our outlook on resource quality which we have derisked extensively. Today, Veren is priced wrong, with PDP ~covering the current enterprise value; Saskatchewan PDP and Duvernay 2P reserves covers >100% of enterprise value at spot pricing implying the Montney is “free”. 

Looking at their broader Montney asset; 

The resource is there, we have independently evaluated and mapped recoverable recourse based on dozens of reservoir and economic factors, and we are confident that Veren can continue to drill wells with top-tier recoveries with SPE fracs. The resource is predominantly oil and NGLs, hydrocarbon migration updip results in a higher liquids weighting than Veren’s gas-condensate peers, and superior liquids F&D which we like in the context of our general preference against natural gas in the WCSB. The resource is variable, but highly economic on aggregate, despite local pockets of excellent rock (i.e. Gold Creek), and some less-than stellar areas; the average well that Veren will drill in the next 20 years will be top-quartile in the Montney

Veren's sell-off has presented an extremely attractive opportunity to own this top-decile Montney asset that will continue producing highly economic well results over the coming decades. We provide a video-format update on how our Veren thesis has evolved below. 

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