Press release from CNW Group
Cequence Announces Expanded Ansell Project and Production of 12,000 boepd
Tuesday, January 21, 2014
Cequence Announces Expanded Ansell Project and Production of 12,000 boepd17:07 EST Tuesday, January 21, 2014
CALGARY, Jan. 21, 2014 /CNW/ - Cequence Energy Ltd. ("Cequence" or the "Company") (TSX: CQE) is pleased to announce expansion of its project at Ansell and production of 12,000 boepd.
Cequence is pleased to announce the initial success of the Company's Wilrich drilling program at Ansell and the addition of key lands increasing its total landholdings to 46.5 gross sections. The most recent Wilrich well was drilled at 14-19 (49 % working interest) and tested at 2,500 boepd, and has produced for 60 days at an average restricted rate of 960 boepd. Two Ansell wells have been completed to date and are ahead of the Company's model expectation. Current net production in the Ansell area is approximately 650 boepd and is restricted by production facilities. One additional Wilrich well was drilled in the first quarter and is awaiting completion and two additional horizontal wells are currently drilling.
The first quarter capital program at Ansell is expected to include six wells (3 net) and the construction of gathering and compression facilities to increase production capacity to approximately 40 mmcf/day. Five of the six wells are scheduled to be 'earning wells' where Cequence pays 15% of the capital cost to retain a 49% working interest with the sixth well scheduled to be drilled at the Company's 49% working interest.
Drilling to date at Ansell has identified the Notikewin and Falher formations as prospective secondary targets on Cequence acreage. Cequence's partner is shooting a 135 square kilometer 3D seismic program to both focus the Wilrich drilling program and image these additional potential targets. With the recent addition of contiguous and highly prospective lands, continued drilling success by Cequence and other operators in the area, the acquisition of 3D data and construction of the gathering system, Ansell is considered a new core area by the Company. Pending results from the initial wells and the ongoing plans of the Company's partner in the area, Cequence may direct additional capital to this area in 2014 to drill additional Wilrich wells and add production facilities.
In the fourth quarter of 2013, Cequence completed a 65% working interest Dunvegan well at 5-2. The well was recently put on production at restricted gross production rates of 10.0 mmcf/d of natural gas and 300 bbls/day of free condensate. The 5-2 well is a follow-up to the Company's 10-2 well that has produced 2.5 bcf since commencing production in February 2013.
Montney development at Simonette is ongoing with three wells drilled in the fourth quarter of 2013. The 10-24 well was recently brought on production at restricted rates of 5.0 mmcf/d and 75 bbls/d of free condensate at flowing casing pressure of 1,715 psi. The 10-24 well is located on a new padsite located 1.5 miles from existing offset Montney development. The remaining two Montney wells were drilled off the 7-29 padsite and experienced mechanical difficulties on completion. Diagnostic tools were run on both wells and Cequence is currently evaluating remediation plans. It is anticipated that completions will be able to be performed on these wells. These two wells offset Cequence's best liquids producers at 9-21 and 3-21.
A Montney exploration well at 16-10-61-01W6 is currently drilling and will be the first test on the southwestern Montney acreage at Simonette which the Company has a 100% working interest. Management believes the geologic data observed from the open hole logs of the full Montney section is encouraging. The well is expected to be completed in the first quarter of 2014. If successful, management believes 16-10 would derisk Montney acreage on the western portion of Simonette where the Company's reserves evaluators have not previously assigned any Montney reserves or resources.
In addition, Cequence has drilled a Wilrich well at 13-30-61-26W5. The 13-30 well is a significant step out from the producing Wilrich wells at Simonette in an area where the Company's reserves evaluators have not previously assigned any Wilirch reserves. The 13-30 well is expected to be completed in February 2014.
The Company currently has two operated rigs drilling at Simonette.
Based on field estimates, production for 2013 averaged 10,200 boepd (56 mmcfd of gas and 1,500 bpd of liquids), which is slightly higher than the Company's previously provided production guidance of 10,000 boepd for the year. The 2013 average production represents an increase of 13 percent above 2012 average production.
Based on field estimates, production recently reached 12,000 boepd with the tie-in of the 5-2 Dunvegan well and the completion of our 10-24 Montney well, both at Simonette, both of which wells are currently restricted. Cequence has recently maximized field capacity at Simonette and Ansell. The 13-11 compression facility at Simonette is being expanded and capacity is expected to reach 70 mmcf/d in early February. Cequence expects to complete an additional 10 gross (7 net) wells in the first quarter of 2014.
Production from the 3-31 and 15-31 Montney wells completed in Q4 2013 have each averaged 860 and 844 boepd (11% condensate), respectively, for the first 60 days of restricted production. Production from both wells is better than the Company's model expectations. The 14-1 Montney well completed in Q4 has produced at an average of 590 boepd (9% condensate) for the first 60 days. This is slightly below the Company's Montney model expectation.
Cequence has now hedged approximately 50% of its 2014 forecast gas production at an average gas price of Cdn $4.00 per mcf.
Cequence is a publicly traded Canadian energy company involved in the acquisition, exploitation, exploration, development and production of natural gas and crude oil in western Canada. Further information about Cequence may be found in its continuous disclosure documents filed with Canadian securities regulators at www.sedar.com.
Forward Looking Information
Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, information with respect to: business strategies; operational decisions and the timing thereof, development, remediation and exploration plans and the timing thereof, including the likelihood that wells will become productive; future production rates and expected production volumes; the number and quality of future potential drilling locations; capital allocations; drilling plans; the derisking of Company acreage; and facility development, expansion and future capabilities. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Cequence believes that the expectations reflected in its forward-looking information is reasonable, undue reliance should not be placed on forward-looking information because Cequence cannot give assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things: cash flow projections and netbacks; anticipated operating costs; bank debt levels; reserves; field production rates and decline rates; the ability of Cequence to secure adequate product transportation; the timely receipt of any required regulatory approvals; the ability of Cequence to obtain qualified staff, equipment and services in a timely and cost efficient manner to develop its business; Cequence's ability to operate the properties in a safe, efficient and effective manner; the ability of Cequence to obtain financing on acceptable terms; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability of Cequence to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Cequence and described in the forward-looking information. The material risk factors affecting Cequence and its business are contained in Cequence's Annual Information Form which is available under Cequence's issuer profile on SEDAR at www.sedar.com. The forward-looking information contained in this press release is made as of the date hereof and Cequence undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward looking information contained in this press release is expressly qualified by this cautionary statement.
BOEs are presented on the basis of one BOE for six Mcf of natural gas. Disclosure provided herein in respect of BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
For the year ended December 31, 2013, the ratio between the average price of West Texas Intermediate ("WTI") crude oil at Cushing and NYMEX natural gas was approximately 27:1 ("Value Ratio"). The Value Ratio is obtained using the 2013 WTI average price of $97.97 (US$/Bbl) for crude oil and the 2013 NYMEX average price of $3.67(US$/MMbtu) for natural gas. This Value Ratio is significantly different from the energy equivalency ratio of 6:1 and using a 6:1 ratio would be misleading as an indication of value.
A pressure transient analysis or well-test interpretation has not been carried out on certain wells and thus certain of the test results provided herein should be considered to be preliminary until such analysis or interpretation has been completed. Readers are cautioned that the foregoing well test results are not necessarily indicative of long-term performance or of ultimate recovery.
The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release.
SOURCE Cequence Energy Ltd.
For further information:
Paul Wanklyn, Chief Executive Officer, (403) 218-8850, email@example.com
David Gillis, Chief Financial Officer, (403) 806-4041, firstname.lastname@example.org