The sun is shining again on the Duvernay’s West Shale Basin, an area we are extremely bullish on. Paramount recently brought a new pad online at Leafland (04-07N) which delivered average initial liquids ‘test’ rates of ~1,200Bbls/d. At a $13.5MM DCE&T, for Willesden Green to be F&D competitive with Kaybob North, Paramount has to deliver an EUR >970MBOE – of which initial results are very supportive. We will continue to see good data out of this fairway as Paramount’s Leafland plant expansion was complete in January – adding 3,700BOE/d of gas handling capacity, and 5,000Bbl/d of liquids handling. For Paramount, the next growth milestone (and milestone for the basin-at-large), is the completion of their Alhambra gas plant in 2H 2025, taking the play to ~20,000BOE/d of sales capacity. Paramount’s communicated liquids EUR of 770MBOE, and oil/condensate EUR of 570MBOE is both competitive with Paramount’s Montney at Karr (590MBbls), and ARC’s planned Attachie type curve (490MBbls). 

Concurrent with their Bonavista acquisition, Tourmaline received a sizeable Pembina Duvernay block which they are now marketing. The weighted average land expiry on this asset 2H 2025, with the earliest in 3Q 2024 which forces the drilling of a number locations before YE 2025, with oil well licensing allowing limited spacing flexibility to hold by production – this asset will have to go to a well capitalized E&P. Though, underwriting some completions improvement, we are confident with the risked 2-mile type curve shown below which delivers strong initial oil, condensate & NGL rates, with an IP₃₀ ~85% liquids, and an EUR that’s ~60% liquids. We like the West Shale Basin due to legacy infrastructure and a good liquids weighting. Given this, at strip, we see a payout across Tourmaline’s marketed asset of ~1.3 years on strip. 

This marketed asset comes at a time when Spartan Delta is actively scaling into the play. They acquired 2 assets in 2H 2023 for ~$25MM in cash (Crescent Point, and Kiwetinohk). While it only included ~400BOE/d of production, we are very constructive this new core area where Spartan holds ~240 net sections supporting up to 1,000 unrisked locations across the liquids fairway (pending further crown land acquisitions). Assets in the area generally delineated, but undercapitalized, with ample legacy infrastructure to produce into, or acquire. Spartan Delta is now the 2^nd largest landholder, behind Paramount. We’d note, that Two distinct, carbonate separated pay zones exist in the core of the West Shale Basin (unlike one target zone at Kaybob) adding significant inventory upside to a successful new D&C design that can tighten spacing. Spartan Delta’s strong technical team has a history of unlocking value in areas previously overlooked, and we see this as no different. 

Today, we have a very positive outlook on Spartan Delta, given their Duvernay entry, and the fact their equity is trading at ~2.6x EV/DACF on a 2025e basis. We expect a Spartan Delta capital raise, or M&A in near future – presenting meaningful opportunity to align with the business and management (12% ownership) with established track record of value creation in the WCSB. Paramount well results derisk Willesden Green development, cashflow funded look through to infrastructure development and play expansion into 2025 and 2026 – we think Paramount presents a strong possibility for substantial rerate into volume growth. Both Spartan and Paramount’s assets are Tier 1, and world class oil-weighted development’s coming at the right time; and we’re excited to watch them grow.