Blackbird Energy Inc. executed a letter of intent (LOI) with a third party for the transportation and processing of sour natural gas produced from its condensate-rich Elmworth Montney project, the company said April 6.

Blackbird and the third party will execute a gas handling agreement; the agreement’s terms have been established and agreed upon in the LOI. The sour gas will be transported to the third party’s plant, and 6 million cubic feet per day (MMcf/d) of gas and liquids will be processed.

Blackbird said that establishing transportation and processing will help it evolve from a an explorer to a producer.

Recently, the 2-20 middle Montney well tested at a restricted rate of 1,768 barrels of oil equivalent per day (boe/d) comprised of 6.8 MMcf/d and 641 bbl/d of liquids. Blackbird then determined to proceed with the transportation and processing agreement.

Transportation and processing is scheduled to begin Jan. 1, 2017, and commencement is scheduled to begin Nov. 1, 2016, subject to certain third-party facility enhancements and regulatory approvals.

The third party’s natural gas transportation tie-in point is 2.4 miles south of Blackbird's battery site. Blackbird is currently in the late stages of its infrastructure engineering and design process. Blackbird's infrastructure solution will include a battery, a pipeline gathering system and a water disposal system. This pipeline gathering system will accommodate the future development of up to 75 de-risked well locations with minimal incremental expansion costs.

Blackbird Energy Inc. is based in Calgary.