Journey Energy Inc. Highlights Encouraging Test Results and Provides Update on East Duvernay Resource Play

CALGARY, April 15, 2019 /CNW/ – Journey Energy Inc. (JOY – TSX) (“Journey” or the “Company“) is pleased to provide an update on our Joint Venture with Kiwetinohk Resources Corp. (“Kiwetinohk“) in the East Duvernay, including the encouraging test rates achieved by the first two commitment wells.

East Duvernay Joint Venture Operational Update

Since entering into the Joint Venture arrangement on August 29^th, 2018, Kiwetinohk and Journey have been actively advancing the development of the East Duvernay property including:

• Expansion of the Joint Venture Duvernay land position to over 105,000 gross acres;
• Drilled, completed, and achieved encouraging test rates from the first two commitment wells;
• Initiated operations on the first well of the five well option phase with the completion and current testing of a short length standing cased well drilled by a previous operator;
• Drilled and rig released a second option well on March 31, 2019 with completion and testing operations anticipated to commence in the second quarter; and
• Licensed option wells three and four at 100/16-12-044-04W5/00 and 100/12-07-042-03W5/00 respectively.

Two Well Commitment Phase Update

Kiwetinohk has drilled, completed and flow tested the following wells:

• Commitment Well #1: HZ 102/16-15-042-03W5/00 (6,500m TMD; 3,590m horizontal length)
• Commitment Well #2: HZ 102/15-31-042-03W5/00 (6,352m TMD; 3,413m horizontal length)

Further details on the drilling and completion of the commitment wells are included in Journey’s year-end press release dated February 27th, 2019.

Commitment Wells Flow Test Results

Cautionary note: Pressure transient analysis or well-test interpretation have not been carried out and therefore the below data should be considered preliminary until such analysis or interpretation has been completed. The test results are not necessarily indicative of long-term performance or of ultimate recovery.

The wells were initially opened to flow up 4½ inch production casing for a cleanup period of 20.4 days (489.5 hours) from March 2, 2019 to March 22, 2019.  By design, the wells flowed at highly restricted rates in order to bleed off some load fluid while allowing the fracs to close slowly thereby minimizing sand production and improving the longer term performance of the wells. To this end, neither well has produced any appreciable sand.

Water cuts declined throughout the cleanup phase from 100% to final levels of 74% and 65% for 16-15 and 15-31 respectively.  All produced water is considered to be load fluid and at the end of the test approximately 4% of load fluid had been recovered from both wells.

Initial clean-up flow summaries by well are as follows:

On March 22, 2019 the clean-up flow was terminated and the wells were equipped with production tubing, and subsequently opened for main flow testing up the tubing.  Rates reported herein reflect the 48 hour period from April 13, 2019 at 6:00 am to April 15, 2019 at 6:00 am.  Cumulative production shown below includes production from the clean-up flow.  As seen during the clean-up phase, water cuts on both wells continued to decline throughout the testing period.

Journey considers these preliminary results to meet or exceed its expectations.  Although preliminary in nature, the results support our hypothesis that a significant portion of the joint venture acreage is within the oil window in a highly productive area of the East Duvernay.

Main Flow Summary:

Both of these wells share the same surface lease and will be equipped and connected to the same multi-well oil battery.  The natural gas will be tied into Journey’s existing gas gathering system and will be processed at the Tidewater operated 1-4-42-3W5 Gilby Gas Plant, of which Journey owns a 43.3% working interest.  Journey anticipates these wells to be on-production in early May.  The Company has a 3.75% GORR on 100% of the production from these two commitment wells with an option to convert the GORR to a 29.17% working interest after payout of 58.33% of the capital has been recovered from each well.

Five Well Option Phase Update

Kiwetinohk is currently active on the following two wells:

Option Well #1:   HZ 102/11-09-044-03W5/00 (1,400m horizontal length)

Kiwetinohk has re-entered this standing, cased well, extended the well 200m and performed two 100 tonne Frac’s on the extended portion.  Kiwetinohk has now Fraced the original 1,200m existing lateral section with 1,400 tonnes of proppant, and the well is currently on flowback to test.

Option Well #2:   HZ 100/13-02-042-04W5/00 (6,072m TMD; 3,056m horizontal length)

Kiwetinohk spud this well on February 26^th with a rig release date of March 31^st.  Prior to drilling the horizontal portion of the well, the vertical portion of the well at 8-16-042-03W5 was logged through the Duvernay. This well is 10 km away from the 6-28-042-03W5 stratigraphic test well at the heel of the commitment wells. The logs confirmed the presence of a Duvernay zone in excess of 30 m in thickness, and significantly higher interpreted porosity than the 6-28 strat well. The horizontal lateral length in the Duvernay is approximately 3,056m and Journey anticipates completion and flow-testing operations to commence in the second quarter.

Option Well Licensing

Kiwetinohk has licensed the following Option Wells:

100/16-12-044-04W5/00
100/12-07-042-03W5/00

Journey anticipates Kiwetinohk will drill these Option Wells in Q2 & Q3 of 2019.

Journey looks forward to updating our shareholders on future activities in the East Duvernay as further information becomes available.

About the Company

Journey is a Canadian exploration and production company focused on oil-weighted operations in western Canada.  Journey’s strategy is to grow its production base by drilling on its existing core lands, implementing waterflood projects, and by executing on accretive acquisitions.  Journey seeks to optimize its legacy oil pools on existing lands through the application of best practices in horizontal drilling and, where feasible, with water floods. Journey is also in the early phases of advancing development of an unconventional shale resource play in the oil window of the Duvernay, in the western shale basin of our central core area.