Jan 25, 2011
North Montney play delivers consistently strong results
CALGARY, Jan. 25 /CNW/ – Progress Energy Resources Corp. (“Progress” or
the “Company”) continues to deliver strong operational results from its
active Montney program in northeast British Columbia and tight gas
program in northwest Alberta. Currently the Company has eight drilling
rigs operating with five in British Columbia and three in Alberta.
Production today is approximately 45,000 barrels of oil equivalent
(“boe”) per day.
Highlights
As announced in November, Progress has advanced its development plans on
six Montney pods in the Foothills of northeast British Columbia, each
capable of reaching 50 mmcf per day and sustaining that level for
approximately 10 years. Progress holds approximately 700,000 net acres
of Montney rights in the Foothills and approximately 900,000 net acres
of Montney rights over its entire land base, making it one of the
largest Montney land rights holders.
Town South Development Pod
The Company’s most mature Montney development is at Town South where
Progress drilled its first Montney well more than two years ago. Since
that time, the Company has drilled 11 horizontal wells with average
30-day initial production rates of five million cubic feet per day.
Additionally, the wells have averaged approximately 20 barrels per
million cubic feet of high value natural gas liquids, enhancing the
economics of this play in the current gas price environment.
In 2010, the Company constructed a compression and dehydration facility
at Town South and has recently expanded the facility to handle 50 mmcf
per day. The facility is currently handling in excess of 35 mmcf per
day. Progress plans on drilling an additional four horizontal wells in
the first quarter and anticipates that its facility will be operating
at near capacity by the end of the first quarter.
In the fourth quarter, Progress drilled its first lower Montney
horizontal test at Town South. This well tested in excess of 8.5 mmcf
per day at 9,000 kpa flowing tubing pressure, confirming the productive
quality of the 200 meter thick Lower Montney interval. In addition,
the well produced natural gas liquids consistent with previously
drilled wells in the Upper Montney.
Kobes Development Pod
Recently completed activities at its Kobes development pod in the North
Montney region, where the Company holds a 30 percent working interest,
include a fourth horizontal well that was completed utilizing cluster
perfs. This well had a one month rate over 11 mmcf per day and is
approximately six kilometers north of the first horizontal well at
Kobes which produced at an average rate of 7.7 mmcf per day on a first
month test.
This latest horizontal well is among the highest test rates in the
entire Montney fairway and continues to validate the scope and scale of
the North Montney resource. Additionally, Progress initiated
exploration of the Upper Montney at Kobes. The first horizontal into
the Upper Montney has continued to clean up after the completion
operation and will be tied into Progress’ gathering system. The last
flow rate was 2.4 mmcf per day and increasing.
Progress recently started up its 25 mmcf per day gas handling facility
at Kobes. The facility is on-stream and producing over 22 mmcf per
day, of which 18 mmcf per day is from the Montney formation. Including
non-operated production, the Kobes development pod is producing 30 mmcf
per day (net 10 mmcf per day) from five horizontal and two vertical
wells.
Montney Delineation Activities
The Company recently completed three vertical exploration wells that are
more than five miles away from existing successful wells. The wells
tested over one mmcf per day on average over a five-day test period.
In particular, one well at Kahta, approximately 20 kilometers north of
Caribou, tested at 750 thousand cubic feet (“mcf”) per day. These
results continue to affirm the large and growing aerial extent of the
Montney gas accumulation.
Deep Basin Activities
Progress drilled five (4.5 net) wells in the Deep Basin during the
fourth quarter. Progress’ Deep Basin wells typically yield
approximately 40 barrels per million cubic feet of natural gas liquids
when processed through the Wapiti Deep Cut Plant, a facility in which
Progress has an ownership interest. The Company plans on drilling 14
wells in the first quarter of 2011 to take advantage of a $200 per
meter drill credit before the program ends in April 2011.
Recent Hedging Activity
Progress recently entered into a series of hedges on a portion of its
natural gas production buying puts on 15,000 gigajoule (“GJ”) per day
at a net floor of $3.35 per GJ. The Company also entered into a series
of swaps and calls (“bull spreads”) on 15,000 GJ per day setting a net
floor at $3.48 and a net ceiling at $4.48 per GJ. Based on Progress’
high heat content gas, the Company has established an aggregate floor
of approximately $3.90 per mcf for the period from February 1, 2011 to
October 31, 2011 on approximately 12 percent of its natural gas
production for 2011.
Year-end 2010 Results
Progress anticipates releasing its fourth quarter and year-end 2010
financial and operating results, after market close, on Thursday,
February 24, 2011.
Progress is a Calgary based energy company primarily focused on natural
gas exploration, development and production in northwest Alberta and
northeast British Columbia. Common shares of Progress are listed on the
Toronto Stock Exchange under the symbol PRQ.
Forward Looking Statement Advisory
This press release and financial highlights table (collectively the
“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; potential drilling inventory; test rates; expected
sources of funding for capital program in the first half of 2011;
Progress’ planned asset disposition program including the timing
thereof and the use of proceeds received therefrom; Progress’ estimated
2010 exit production rate; potential drilling credits and the
advantages to be received therefrom; effect of capital expenditures on
production; effect on production of scheduled plant turnaround at
third party owned McMahon natural gas processing facility; 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.