Jan 9, 2012
North Montney growth drives exit production to 50,000 boe per day
CALGARY, Jan. 9, 2012 /CNW/ – (TSX – PRQ) - Progress Energy Resources Corp. (“Progress” or the “Company”)
continues to deliver strong operational results from its capital
investment program. Focused investment in the North Montney
unconventional shales in northeast British Columbia has resulted in the
Company achieving its production goal of exiting 2011 at 50,000 boe per
day, 11 percent higher than its 2010 exit rate. Progress is targeting
to exit 2012 at approximately 60,000 boe per day or approximately 20
percent higher than 2011. Currently the Company has seven drilling
rigs operating with three on its North Montney acreage, three on its
North Montney Joint Venture (“NMJV”) with PETRONAS and one pursuing its
Dunvegan light oil play in Alberta.
Progress is currently producing approximately 130 million cubic feet
(“mmcf”) per day from the North Montney which represents a doubling of
Montney production over the past year. The Company currently has ten
North Montney pods at various stages of development in the Foothills of
northeast British Columbia, each targeting production of 50 mmcf per
day. Progress holds approximately 625,000 net acres of Montney rights
in the North Montney and approximately 825,000 net acres of Montney
rights over its entire land base, making it one of the largest Montney
land rights holders in the entire fairway.
North Montney Development Pods
The Company’s most mature development is at Town South where Progress
drilled its first Montney horizontal well less than three years ago.
Since that time, the Company has drilled 21 horizontal wells
successfully targeting the Upper and Lower Montney. The Company
anticipates drilling approximately six to seven wells per year to
maintain production at 50 mmcf per day. The Town South wells have
consistently produced between 15 to 20 barrels per million cubic feet
of high value liquids and, when combined with the British Columbia deep
drilling royalty credit of approximately $2 million per well, the well
economics for production in the North Montney remain attractive.
Total capital investment of $415 million in 2012, including
approximately $40 million in the Deep Basin, will see the Company
advance its North Montney development pods at Gundy, West Gundy, Kobes,
and Town North, while further delineating across the Company’s industry
leading North Montney land base.
At Gundy (100 percent working interest), the 50 mmcf per day facility
constructed in 2011 is currently processing approximately 40 mmcf per
day from ten producing horizontals and with the construction of a 16
inch sales line to the Spectra Highway Plant, liquid production has
increased to approximately 30 barrels per mmcf due to enhanced liquids
recovery. Both the Upper and Lower Montney were successfully tested
and are on production in the area. A Middle Montney test will be
completed in 2012. A further eight to eleven locations are planned for
2012 which will see production at the Gundy pod exceed 50 mmcf per
day. At current well performance rates, multiple zone success and
higher liquids yield, further expansion of the Gundy facility may be
undertaken in 2012.
The first horizontal at the West Gundy development pod (100 percent
working interest), tested over 11 mmcf per day, and continues to
produce at a restricted rate of 6 mmcf per day. Four additional wells
and a 25 mmcf per day facility are planned for the first quarter of
2012. An additional four to eight wells along with an expansion of the
West Gundy facility to 50 mmcf per day is under consideration for the
second half of 2012.
At the Kobes development pod (30 percent working interest), the company
has seven producing horizontals with plans to drill four locations in
the northern portion of the development which is Company operated. The
2012 wells will fill an expanded 50 mmcf per day Progress operated
facility that is to be completed in the third quarter of 2012.
At Town North (100 percent working interest), Progress has eight
producing horizontals and two wells currently being completed, with
both the Upper and Lower Montney productive in the area. Two
additional locations are planned for 2012, with the additional volumes
being accommodated by the 25 mmcf per day Town North facility that was
brought on stream in the second quarter of 2011.
Progress holds a further 350,000 net acres of North Montney rights that
fall outside of the currently defined development pods and the NMJV.
The Company plans to drill seven to nine wells in 2012, in the Greater
Caribou, Bubbles and Blueberry areas in order to further delineate its
land position and define additional pods in the North Montney.
North Montney Joint Venture
Progress and PETRONAS established a joint venture in 2011 whereby
PETRONAS acquired a 50 percent working interest in three land blocks in
the North Montney encompassing approximately 150,000 acres (gross) at
Altares, Lily and Kahta for $1.07 billion. PETRONAS paid $267.5
million in cash at closing and the remaining $802.5 million will be in
the form of a capital carry where PETRONAS will pay 75 percent of
Progress’ 50 percent working interest. Additionally, the partners are
exploring the potential to develop liquefied natural gas (“LNG”) export
capacity on the west coast of British Columbia (“the LNG Export Joint
Venture”).
For 2012, the partners anticipate investing approximately $341 million
gross and $47 million net to Progress on the NMJV acreage. At present,
three drilling rigs are operating on the NMJV acreage and the partners
are shooting expansive 3D seismic as well as working on facility and
pipeline construction. The partners plan to drill 23 to 29 horizontal
wells in 2012 on the NMJV lands along with four compressor stations, a
50 mmcf per day refrigeration facility at Altares and associated
pipelines.
With respect to the LNG Export Joint Venture, the partners are currently
in the detailed feasibility study (“DFS”) phase of the project. This
involves a detailed technical assessment, site selection, commercial
evaluation and permitting and regulatory identification. The DFS phase
is expected to be completed in the third quarter of 2012.
Dunvegan Light Oil Play
The Company also continues to pursue its Dunvegan light oil play in the
Deep Basin of northwest Alberta. The Company’s first Dunvegan well, a
2,750 meter horizontal test, produced an average of 250 boe per day of
40° API light oil over a 30 day test period and is still producing over
85 boe per day after thirteen months of operation. Progress’ second
well expanded the play 39 kilometers to the northwest from the original
test. The second well produced an average of 355 boe per day over the
first 30 days and continues to produce over 270 boe per day after eight
months of production. The Company’s third test was placed on
production in the third quarter of 2011 and averaged 340 boe per day
for the first month and continues to produce 170 boe per day after six
months of production. Two additional wells were drilled in the fourth
quarter of 2011 and are currently in various stages of completion.
Three additional wells will be drilled in the first quarter of 2012.
Progress currently has a drill ready inventory of over 50 wells in the
play.
Year-end 2011 Results
Progress will release its fourth quarter and year-end 2011 financial and
operating results, after market close, on Thursday, March 1, 2012.
Progress is a Calgary based energy company primarily focused on natural
gas exploration, development and production in northeast British
Columbia and northwest Alberta. Common shares of Progress are listed on
the Toronto Stock Exchange under the symbol PRQ.
Forward Looking Statement Advisory
This press release contains forward-looking statements and forward-looking
information within the meaning of applicable securities laws. The use
of any of the words “expect”, “anticipate”, “continue”, “estimate”,
“objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”,
“plans”, “intends” and similar expressions are intended to identify
forward-looking information or statements. In particular, forward
looking statements in this press release include, but are not limited
to, statements with respect the effect of the development pods on the
Company’s natural gas production and reserve base over the next five
years; the pace of capital investment; the focus of capital
expenditures, the timing of capital spending and the results therefrom;
the focus of the Company’s exploration and development efforts;
expected capital spending program; potential capital investment
opportunities; expected capital spending on the North Montney Joint
Venture; potential drilling inventory; test rates; expected sources of
funding for capital program in 2012; Progress’ estimated 2011 exit
production rate and forecast 2012 exit production rate; potential
drilling credits and the advantages to be received therefrom; effect of
capital expenditures on production; growth potential and rates of
return of Progress’ assets; pace of development; projections of future
land holdings; and future drilling plans and programs, the timing
thereof and the results therefrom.
The forward-looking statements and information are based on certain key
expectations and assumptions made by Progress, including expectations
and assumptions concerning prevailing commodity prices and exchange
rates, applicable credits, royalty rates and tax laws; future well
production rates; test rates and reserve and resource volumes; the
performance of existing wells; the success obtained in drilling new
wells; the sufficiency of budgeted capital expenditures in carrying out
planned activities; and the availability and cost of labour and
services and future operating costs. Although Progress believes that
the expectations and assumptions on which such forward-looking
statements and information are based are reasonable, undue reliance
should not be placed on the forward looking statements and information
because Progress can give no assurance that they will prove to be
correct.
Since forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. These
include, but are not limited to, the risks associated with the oil and
gas industry in general such as operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the
uncertainty of reserve and resource estimates; the uncertainty of
estimates and projections relating to test rates, reserves, resources,
production, costs and expenses; health, safety and environmental risks;
commodity price and exchange rate fluctuations; marketing and
transportation; loss of markets; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to realize
the anticipated benefits of acquisitions; ability to access sufficient
capital from internal and external sources; changes in legislation,
including but not limited to tax laws, royalties and environmental
regulations.
Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release
in order to provide security holders with a more complete perspective
on the Company’s future operations and such information may not be
appropriate for other purposes. The Company’s actual results,
performance or achievement could differ materially from those expressed
in, or implied by, these forward-looking statements and, accordingly,
no assurance can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them
do so, what benefits that the Company will derive there from. Readers
are cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this press
release and the company disclaims any intent or obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable securities laws.
Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that
could affect the operations or financial results of Progress are
included in reports on file with applicable securities regulatory
authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this
press release are made as of the date hereof and Progress undertakes no
obligation to update publicly or revise any forward-looking statements
or information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
Barrels of Oil Equivalent
“Boe” means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of
natural gas. Boe’s may be misleading, particularly if used in
isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of
natural gas is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.