Storm Resources to cut $25M in 2016 spending

Storm Resources Ltd., an oil and gas company with holdings in the Montney shale and the Horn River Basin, plans to cut around $25 million in 2016 capital spending, according to fourth-quarter 2015 results released last week.

The company is the fifth-largest oil and gas operator in British Columbia.

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In results published Feb. 25, Storm cited low oil and gas prices and a 2015 net loss of $6.8 million as reason for the cuts to capital spending. The results do not mention any reduction in staff.

The company says reduced spending will result in fewer wells drilled, as well as delay of a third compressor station in its Umbach gas field north of Fort St. John. Storm expects $25 million in capital spending in the first quarter of 2016, part of an overall $80 million spending plan this year. That's down from a planned $105 million, as well as from the $90 million spent in 2015.

"If commodity prices remain at current levels or continue to decline, capital investment would likely be further reduced in mid-May to approximately $45 million," the company said.

The company shifted its focus to B.C. in 2015, selling off assets in the Grande Prairie area. While Storm has holdings in the Horn River Basin near Fort Nelson, 100 per cent of its gas production in late 2015 came from the Montney shale, where it holds 109,000 acres. The company has drilled 44 wells in the area, 31 of which are in production.

Storm is not connected to any of the proposed liquefied natural gas (LNG) projects on the B.C. coast. It ships much of its gas on the Alliance Pipeline, as well as to the AECO Hub in southern Alberta and the B.C. Station 2 near Fort St. John.

Storm was the fifth most active oil and gas company in B.C. last year, behind Progress Energy, Encana Corp., Tourmaline Oil, and ARC Resources. Encana announced it would cut around $75 million in B.C. spending last week.

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