Rubellite Energy is part of a new revolution for heavy oil production in Canada utilizing multi-lateral drilling technology
Rubellite Energy (Rubellite) is a growing junior public company that focuses on exploring and producing heavy oil in Canada’s Clearwater and Mannville Stack formations. Operating in Eastern Alberta, the company is pursuing a robust organic growth plan through its valuable asset base, employing multi-lateral drilling technology to generate superior corporate returns while maintaining a conservative capital structure. Sue Riddell Rose, President and Chief Executive Officer, comments on Rubellite’s business plan and capital investment focus and highlights its 2024 merger and acquisition activities.
Rubellite was incorporated by Perpetual Energy (Perpetual) and established through a plan of arrangement in September 2021. “Perpetual spun out Rubellite to bring in capital to fund a promising emerging asset in the Clearwater formation that was showing significant potential. Forming a new public company secured the capital and new investor base we needed to pursue the Clearwater-focused strategy,” Sue begins. “In September 2021, Rubellite acquired Perpetual’s Clearwater assets for ~$65 million. The assets included 350 bbl/d of heavy oil production and 100 net sections of undeveloped land.
“The company started putting capital to work in both exploration and development in the Clearwater formation, executing a growth focused business plan to grow production, cash flow reserves and value and expand the heavy oil asset base. The Clearwater play has been highly successful for Rubellite, with production growing from about 350 barrels a day to over 5,000 barrels a day, almost all of which has been organically through the drill bit.
“Last year, we completed two major transactions,” Sue continues. “One involved adding a new core area targeting the Mannville Stack in the Cold Lake area, leveraging our expertise with the multi-lateral drilling technology that had proved successful in the Clearwater formation. This expansion came through acquiring a company named Buffalo Mission, which added daily heavy oil production of about 2,500 barrels per day, taking our total heavy oil production to over 7,500 barrels a day.
“As a mechanism to re-establish financial flexibility after the Buffalo Mission acquisition, we decided it was the right time to look at recombining Perpetual into the fold of Rubellite. At the time, Perpetual produced over 4,000 barrels of oil equivalent (BOEs) per day, primarily consisting of gas and liquids-rich gas. From our point of view, this decision was well-timed and enabled us to leverage the available financial capacity on Perpetual’s balance sheet. Furthermore, it gave us a certain degree of commodity diversification during what we believed to be the low point for the gas price cycle. The integration also brought about operational and administrative synergies. Since the completion of this transition on November 1st, we have evolved into a company producing 12,000 BOE per day, comprising around 8,000 BOEs of heavy oil production and 4,000 BOEs of gas and natural gas liquids,” Sue enlightens.
Optimization strategies 
As a few years have passed since the inception of Rubellite and with the recombination transaction bringing Rubellite and Perpetual back together, Sue reflects on the changes that have followed within the company. “We are a stronger company with a clear business plan and well positioned for another level of growth. At Rubellite, our business plan remains the same, focused on robust, organic heavy oil growth utilizing multi-lateral drilling technology, with Perpetual increasing our scale and efficiency, and providing us with financial optionality and diversification from a risk management point of view. We will continue to develop our base assets in the Clearwater Formation and the Mannville Stack, which have an extensive inventory of drilling locations to continue to grow the operations. Another strategic focus for us this year is to get more from our base assets by advancing enhanced oil recovery ideas in our Clearwater pools and by evaluating secondary zones in the Mannville Stack. Alongside an even greater emphasis on exploration, these themes represent our key strategic priorities for the year ahead,” she states.
Focusing specifically on Rubellite’s work in the Clearwater formation, Sue sheds light on ongoing optimization of the development of the large oil accumulations and experimentations with technology. “Figure Lake, our main property in the Clearwater formation, is turning out to be a great success. This asset accounts for the majority of our production, with close to 100 multi-lateral wells currently in operation. There we conducted a pilot test in 2024 for downspacing by increasing the number of legs in our well design, to open up more reservoir per well to optimize our primary development performance and its economic value. Following up the positive outcomes from last year’s pilot test, we are implementing this downspace well design across the entire field as we forecast increased production per well and ultimately expect some increased recovery of the oil reserves from the reservoir. Transitioning from a standard 50-meter well spacing design to our new 33-meter spacing within the same reservoir catchment area is part of our ongoing efforts.
“The oil extracted at Figure Lake in the southern Clearwater trend is slightly heavier than in other regions such as Marten Hills and Nipisi. Taking this into consideration, we are looking to new technologies to enhance recovery of the large oil in place at Figure Lake beyond water flooding. While there has certainly been lots to observe from other operators having some nice success with water floods in the Clearwater in Marten Hills-Nipisi, we believe that the heavier oil presents an opportunity to experiment with some technologies that add a bit of heat or solvent and may result in higher recovery factors than we might expect from waterflood alone. To that end, we have established an experimental pad with a well dedicated to testing different solvents and carrier fluids. Through these experiments, we aim to gather valuable insights in order to implement a pilot project by next year,” she enlightens.
Energy transformation
On a more personal note, Sue recounts her journey in the oil and gas industry, clarifying her role in Rubellite’s success. “Raised in Calgary, Canada, I am a geological engineer by training. When I graduated from Queen’s University, I came back to Calgary and started my career at Shell Canada. After approximately five years, I moved on to Paramount Resources, the company Perpetual was originally spun out from, under the name Paramount Energy Trust in 2002. Paramount Energy Trust lived some turbulent times with regulation and legislation changes but successfully consolidated shallow gas assets in line with its business mandate until 2008, when changes in Canadian legislation concerning trusts prompted us to shift back to being a corporation and changes in drilling technology drastically altered natural gas markets. We converted to Perpetual Energy in 2010 and expanded into the deep basin in West Central Alberta with the acquisition of Profound Energy and follow-on exploration to unlock the Wilrich formation with multi-stage frac technology. At the same time, we found opportunities to integrate heavy oil into our shallow gas operations and subsequently transitioned to focus on heavy oil as a mainstay of our business plan.”
Sue has deep family roots in the industry. Paramount Resources was founded by her father, Clay Riddell over 40 years ago, and continues to be a going-concern intermediate independent oil and gas explorer and producer managed by family. Furthermore, Sue’s husband serves as the head of Tourmaline Oil Corp., Canada’s largest natural gas producer. “We are deeply connected to this industry in Canada and we are passionate about what it does for our teams, for Albertans, for Canadians and for bettering human lives,” Sue reveals.
In the gas and oil industry, the energy transformation is a matter that is regularly at the heart of discussions. Sue shares Rubellite’s perspective on the subject, outlining the ways in which the company addresses sustainability. “First and foremost, we believe that a full scale transition to renewable energy is not a smart or viable solution. Renewables are intermittent by design, which means it is impossible for them to be the sole, ultimate energy source. Hence, instead of talking about an ‘energy transition,’ we focus on the ongoing ‘energy transformation.’ This transformation is evident as society is progressively adopting ever cleaner technologies that contribute to all elements of the energy system and all forms of energy. Given the continuing surge in energy demands, which is now particularly driven by technology, artificial intelligence (AI), and the data center revolution, society’s energy requirements are expanding rapidly. Moreover, there is a growing global population striving for prosperity and this whole world outside of the developed nations presents massive potential for explosive growth in energy demand. Meeting that demand and being part of helping move communities, countries and billions of people out of energy poverty to improved living standards, health and economic opportunities through access to reliable energy is our bigger world objective and doing so in an environmentally sustainable way is fundamental.
“To support this goal of providing ever-cleaner energy, we are connected with multiple industry consortia dedicated to advancing clean energy technologies. On the technology side, there have been significant advancements in areas like methane emissions reduction. Recently, we have invested in gas conservation infrastructure in our Figure Lake field by connecting our pads with an extensive gathering system and building a new gas plant to tie in our solution gas. With commissioning and start-up in late January 2025, we will work to significantly reduce flaring as a direct outcome of this initiative. Our approach prioritizes initiatives that not only contribute to environmental goals but also provide a return on our investments through revenue enhancements. While these projects may not always be as competitive as our primary business investments, we view them as worthy and important to our overall strategy, hence why we invest in them as well,” she adds.
Team focus
Sue goes on to explain how Rubellite’s entrepreneurial approach and history permeate and shape the company’s culture. “Since our early days as Paramount Energy Trust, our company has faced many challenges. Initially, Paramount Energy Trust’s strategy focused on being a consolidator of shallow gas assets in northern Alberta. While operating as a royalty trust, our business model revolved around distributing excess cash to shareholders at a sustainable rate and optimizing the development of our more mature assets. Approximately three months after the spin-out of Paramount Energy Trust from Paramount Resources, we were surprised by a major regulatory challenge and crisis truly defined our culture . We have gone through various trials and tribulations throughout our history, thereby fostering that culture of perseverance, innovation, and accountability throughout our organization. Indeed, that culture continually prompts us to explore avenues for improvement by continually asking that question “What more can we do to achieve the results we want to achieve”.
“We are a family-oriented business, partly because of our ownership structure but especially because its innate to our corporate culture. We live what we call Flex Life, so our team can balance life’s priorities and at the same time bring our best to the team. In line with this philosophy, the way we work is inclusive by nature, perceiving diversity through the lens of the individuals that make up our team and inclusion as the sense of belonging and teamwork we experience together. Our way of problem solving is team-focused and consensus-building, and we think this drives superior results. Even before diversity, equity and inclusion initiatives programmatically came to the forefront in our industry, it was ingrained in the way we do business,” she concludes.
Canada’s heavy oil landscape is undergoing a strategic shift, pioneered by innovation and Rubellite is part of it. By leveraging its multi-lateral drilling technology expertise and remaining committed to innovation in all areas of their business, Rubellite is poised to unlock opportunities and add value to stakeholders near and far.