CALGARY, Aug. 29, 2014 /CNW/ - Ironhorse Oil & Gas
Inc. ("Ironhorse" or the "Company") (TSX-V: IOG) announces its
financial and operating results for the three and six months ended
June 30, 2014 and provides an
operational update on activities to date this year as well as an
outlook for the remainder of 2014.
Financial and Operation Summary
The Company's working capital position has remained strong at
$2.3 million at June 30, 2014, compared with $2.2 million at March
31, 2014. Although the Pembina Nisku wells were placed
on production in early March of 2014, the Company's reported Q2
production has stayed flat at 30 boe/d, as compared to the first
quarter of 2014. Production from the Pembina wells was restricted
due to insufficient blend gas volumes at the Sinopec Daylight
Energy Ltd. (Sinopec) operated 13-2 battery.
Since onset of production in early March of 2014, the Company's
share of sales volume from the Nisku L2L pool was 1,700 boe. The Pembina
Nisku producing wells are tied in to the Sinopec operated 13-2
battery and are contract operated by Sinopec. The two wells
produced intermittently throughout the quarter due to insufficient
blend gas at the battery site. The licensed maximum hydrogen
sulphide (H2S) concentration of the pipeline leaving the 13-2
battery requires the solution gas from the two Nisku wells be reduced to 10% using a blend
gas stream. Sinopec had indicated sufficient blend gas volumes
would be available throughout the quarter from new wells being
brought on production to the 13-2 battery. However, the blend
gas volumes producing to the 13-2 battery were not sufficient to
reduce the H2S levels to the required pipeline specifications which
resulted in the Pembina production being severely restricted.
An alternative source of blend gas was obtained which required
construction and tie in of a gas pipeline to the Sinopec
battery. On July 17, 2014
the tie in for blend gas was completed and test production
began. The Pembina 9-05 well was brought back on production
for testing. The Pembina 9-05 well was tested for 11 days at an
average of 600 gross bbls/d of oil (net 94 bbls/d), at a 16% choke
rate (choked back 84%). The 9-05 well was then shut in and
the 14-05 commenced test at restricted rates. The flow rate,
averaging 440 gross bbls/d of oil (net 69 bbls/d) and subsequent
low flowing temperature, caused wax to form at surface, requiring
the well to be shut-in. The 14-05 well has now been brought back on
production to complete flow testing.
Although sufficient blend gas is currently available to allow
the producing rate of both Nisku
wells to be increased, additional upgrades by Sinopec at the 13-2
battery are required in order for the wells to be produced at
significantly higher rates. These upgrades include
installation of a new separator, additional compression, and a
vapour recovery unit. Battery upgrade plans are being reviewed and
discussed with Sinopec.
During the quarter, the Company and its working partners
received approval from the Alberta Energy Regulator (AER) for water
injection and an Enhanced Recovery Application Scheme. The approval
allows for immediate water injection and Good Production Practice
(GPP) status.
SELECTED
INFORMATION
|
|
For three months
ended
|
|
|
June
30,
|
March 31,
|
June 30,
|
($ thousands except
per share & unit amounts)
|
|
2014
|
2014
|
2013
|
Financial
|
|
|
|
|
Petroleum and natural
gas revenues (1)
|
|
157
|
134
|
449
|
Funds from operations
(2)
|
|
98
|
(44)
|
9
|
Per
share – basic and diluted
|
|
-
|
-
|
-
|
Net income
(loss)
|
|
51
|
(82)
|
(209)
|
Per
share – basic and diluted
|
|
-
|
-
|
(0.01)
|
Capital expenditures
(3)
|
|
-
|
636
|
44
|
Operation
|
|
|
|
|
Production
|
|
|
|
|
Oil & NGL
(bbl/d)
|
|
11
|
8
|
40
|
Gas
(mcf/d)
|
|
112
|
124
|
435
|
Total
(boe/d)
|
|
30
|
28
|
113
|
Petroleum and natural
gas revenues ($/boe)
|
|
57.59
|
52.87
|
43.62
|
Royalties
($/boe)
|
|
3.53
|
(10.85)
|
(10.97)
|
Operating expenses
($/boe)
|
|
(9.35)
|
(11.77)
|
(15.49)
|
Operating netback
($/boe)
|
|
51.77
|
30.25
|
17.16
|
(1)
|
Petroleum
and natural gas revenues are before royalty expense.
|
(2)
|
Funds from
operations and net debt are non-GAAP measures as defined in the
Advisory section of the MD&A.
|
(3)
|
Capital
expenditures are before acquisitions and
dispositions.
|
Additional Information
Ironhorse's complete results for the three and six months ended
June 30, 2014, including unaudited
condensed financial statements and the management's discussion and
analysis are available on SEDAR or the Company's web site at
www.ihorse.ca
About Ironhorse:
Ironhorse Oil & Gas Inc. is a Calgary-based junior oil and natural gas
production company trading on the TSX Venture Exchange under the
symbol "IOG."
Forward-looking statements:
Statements throughout this release that are not historical
facts may be considered to be "forward looking statements." These
forward looking statements sometimes include words to the effect
that management believes or expects a stated condition or result.
All estimates and statements that describe the Company's
objectives, goals, or future plans, including management's
assessment of future plans and operations, drilling plans and
timing thereof, expected production rates and additions and the
expected levels of activities may constitute forward-looking
statements under applicable securities laws and necessarily involve
risks including, without limitation, risks associated with oil and
gas exploration, development, exploitation, production, marketing
and transportation, volatility of commodity prices, imprecision of
reserve estimates, environmental risks, competition from other
producers, incorrect assessment of the value of acquisitions,
failure to complete and/or realize the anticipated benefits of
acquisitions, delays resulting from or inability to obtain required
regulatory approvals and ability to access sufficient capital from
internal and external sources and changes in the regulatory and
taxation environment. As a consequence, the Company's actual
results may differ materially from those expressed in, or implied
by, the forward-looking statements. Forward-looking statements or
information are based on a number of factors and assumptions which
have been used to develop such statements and information but which
may prove to be incorrect. Although the Company believes that the
expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements because the Company can give no
assurance that such expectations will prove to be correct. In
addition to other factors and assumptions which may be identified
in this document, assumptions have been made regarding, among other
things: the ability of the Company to obtain equipment and services
in a timely and cost efficient manner; drilling results; the
ability of the operator of the projects which the Company has an
interest in to operate the field in a safe, efficient and effective
manor; and field production rates and decline rates. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect
the Company's operations and financial results are included
elsewhere herein and in reports on file with Canadian securities
regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com). Furthermore, the forward-looking
statements contained in this release are made as at the date of
this release.
Boe Conversion – Certain natural gas volumes have been
converted to barrels of oil equivalent ("boe") whereby six thousand
cubic feet (mcf) of natural gas is equal to one barrel (bbl) of
oil. This conversion ratio is based on an energy equivalency
conversion applicable at the burner tip and does not represent a
value equivalency at the wellhead.
"Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release."
SOURCE Ironhorse Oil & Gas Inc.