Company returns to traditional methods following underperformance of new well design
Veren Inc. announced a cut to its 2024 production forecast after encountering setbacks with new well designs in Alberta’s Montney region, causing its stock to drop over 14% on Thursday as reported by BNN Bloomberg.
The company reported that a key test of its “plug and perf” well design in the Gold Creek area underperformed, forcing Veren to return to its previous single-point-entry design for the region.
The revised forecast now estimates 2024 production at 191,000 barrels of oil equivalent per day (boe/d), down from an earlier range of 192,500 to 197,500 boe/d. This reduction highlights the challenges Veren faces in streamlining operations in the Montney region, where it has heavily invested through major acquisitions to strengthen its position in North America’s resource-rich zones.
Addressing the well performance and revised production targets on an analyst call, Veren CEO Craig Bryksa clarified that the disappointing results were limited to specific well pads in the Gold Creek area, suggesting the market reaction may have been exaggerated.
“I think this will filter through in the next couple days,” Bryksa said, adding that the trial of the plug and perf design has expanded the company’s understanding of the region.
“I think the market will start to see the opportunity in front of them, and I’m excited when we start to look into 2025, knowing we’re so much smarter going into that year than we were going into 2024.”
The Montney and Kaybob Duvernay plays have been central to Veren’s strategy, underscored by acquisitions such as the $900 million purchase of Shell Canada’s Kaybob Duvernay assets in 2021, followed by the $1.7 billion acquisition of Spartan Delta Corp.’s Montney assets and another $2.55 billion Montney acquisition from Hammerhead Energy Corp.
Approximately 85% of Veren’s 2025 budget is allocated to projects in these two areas, affirming the company’s commitment to becoming a dominant force in Canadian oil production.
In a note to investors, RBC Capital Markets analyst Michael Harvey described the company’s third-quarter results as “negative,” pointing out that the lowered 2024 guidance and a 2025 projection that is around 5% below market expectations could further impact investor confidence.
