(TSX: AAV)
CALGARY, Sept. 3, 2019 /CNW/ - Advantage Oil &
Gas Ltd. ("Advantage" or the "Corporation") is pleased to announce
a significant Montney light oil
pool has been discovered and appraised at Progress, Alberta, on the Corporation's 47 net section
block of 100% owned lands. This discovery elevates the
Progress asset to be a primary element of the Corporation's
near-term liquids development program.
Advantage has drilled four successful Montney wells to date at Progress, with the
most recent located at 16-36-76-10W6 demonstrating average
production test rates over 2,100 boe/d (62% liquids). The 16-36
well was drilled to a measured depth of 5,268 meters with a lateral
length of 2,867 meters. Following fracture stimulation using
approximately 2 tonnes of sand per meter, the well was flowed-back
on clean-up, then subjected to a 72-hour production test at the end
of the operation. The test results were as follows:
- Production rates and pressure were increasing throughout as the
well continued to clean up
- Average oil rate during the 72-hour test was 1,038 bbls/d (43
degree API oil)
- Average gas rate during the 72-hour test was 4.9 mmcf/d
- Recoverable natural gas liquids entrained in the gas were
approximately 290 bbls/d based on the average gas rate during the
72-hour test, using Glacier Gas Plant recoveries
- Average flowing pressure during the 72-hour test was 5,168 kPa,
increasing throughout
- H2S content averaged approximately 0.1%
Two of the previous three wells drilled at Progress were in the
same layer (D3) and demonstrated similar combined oil/NGL
yields. The 16-36 well was completed with an updated frac
design which is considered by Advantage to be a significant factor
contributing to the high liquids yield and overall productivity.
The Progress lands were acquired over the last 5 years and
appraisal began in 2017. The four wells delineate the entire
Progress land block and confirm the extensiveness of the oil
accumulation.
The 16-36 well was shut-in for equipping and tie-in on September
2. The asset will be tied-in to Advantage's 100% owned Glacier
Gas Plant for gas processing and liquids extraction, making use of
existing surplus plant capacity and an existing section of an
unused Advantage pipeline. The tie-in and equipping of the
wells are targeted for completion by November 2019.
The 16-36 well represents a major milestone in demonstrating
that each of Advantage's land blocks (Glacier, Pipestone/Wembley, Valhalla and Progress) features high-quality
resource with attractive economics in the current commodity price
environment. With this top-tier result at Progress, the asset
has become a key element of the Corporation's near-term liquids
development plan and is viewed by Management as competitive with
Pipestone/Wembley.
Successful Liquids Development Continues with Liquids
Production Increasing to 3,300 bbls/d
The Corporation's focus on liquids development has resulted in
liquids production more than doubling, from an average rate of
1,491 bbls/d in 2018 to over 3,300 bbls/d in August 2019. Condensate-rich wells at east
Glacier and Valhalla have driven
the recent growth. In addition, Advantage's first Pipestone/Wembley well is expected to be brought
on-production during the second half of September 2019 in conjunction with the
commissioning of Tidewater's Pipestone gas plant.
Advantage continues to monitor natural gas price volatility and
reduce gas production during times of low prices, consistent with
our previously announced production strategy (see press release
August 1, 2019). The Corporation is
also proactively managing its capital spending plans to maintain a
strong balance sheet and preserve financial flexibility.
Forward Looking Statement Advisory
The information in this press release contains certain
forward-looking statements, including within the meaning of
applicable securities laws. These statements relate to future
events or our future intentions or performance. All statements
other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "seek", "anticipate",
"plan", "continue", "estimate", "demonstrate", "expect", "may",
"can", "will", "project", "predict", "potential", "target",
"intend", "could", "might", "should", "guidance", "believe",
"would" and similar expressions and include statements relating to,
among other things, Advantage's focus, strategy, plans and
expectations for its operations generally; factors believed to be
contributing to the Corporation's liquids yields and overall
productivity; the anticipated timing of when wells will be tied-in
and equipped; the Corporation's plans to review the Progress asset
as part of its development plan and capital allocation; the
anticipated number of wells to be brought on production in east
Glacier and Valhalla; the
anticipated timing of bringing Advantage's Pipestone/Wembley well on-production; the Corporation's
production strategy and the implementation of such strategy; and
Advantage's management of its capital spending plans. Advantage's
actual decisions, activities, results, performance or achievement
could differ materially from those expressed in, or implied by,
such forward-looking statements and accordingly, no assurances can
be given that any of the events anticipated by the forward-looking
statements will transpire or occur or, if any of them do, what
benefits that Advantage will derive from them.
These statements involve substantial known and unknown risks
and uncertainties, certain of which are beyond Advantage's control,
including, but not limited to: changes in general economic, market
and business conditions; industry conditions; actions by
governmental or regulatory authorities including increasing taxes
and changes in investment or other regulations; changes in tax
laws, royalty regimes and incentive programs relating to the oil
and gas industry; Advantage's success at acquisition, exploitation
and development of reserves; unexpected drilling results; changes
in commodity prices, currency exchange rates, capital expenditures,
reserves or reserves estimates and debt service requirements; the
occurrence of unexpected events involved in the exploration for,
and the operation and development of, oil and gas properties,
including hazards such as fire, explosion, blowouts, cratering, and
spills, each of which could result in substantial damage to wells,
production facilities, other property and the environment or in
personal injury; changes or fluctuations in production levels;
delays in anticipated timing of drilling and completion of wells;
individual well productivity; competition from other producers; the
lack of availability of qualified personnel or management; credit
risk; changes in laws and regulations including the adoption of new
environmental laws and regulations and changes in how they are
interpreted and enforced; our ability to comply with current and
future environmental or other laws; stock market volatility and
market valuations; liabilities inherent in oil and natural gas
operations; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands and skilled personnel;
incorrect assessments of the value of acquisitions; geological,
technical, drilling and processing problems and other difficulties
in producing petroleum reserves; ability to obtain required
approvals of regulatory authorities; and ability to access
sufficient capital from internal and external sources. Many of
these risks and uncertainties and additional risk factors are
described in the Corporation's Annual Information Form which is
available at www.sedar.com ("SEDAR") and www.advantageog.com.
Readers are also referred to risk factors described in other
documents Advantage files with Canadian securities
authorities.
With respect to forward-looking statements contained in this
press release, Advantage has made assumptions regarding, but not
limited to: conditions in general economic and financial markets;
effects of regulation by governmental agencies; current and future
commodity prices and royalty regimes; future exchange rates;
royalty rates; future operating costs; availability of skilled
labor; availability of drilling and related equipment; timing and
amount of net capital expenditures; the impact of increasing
competition; the price of crude oil and natural gas; that the
Corporation will have sufficient cash flow, debt or equity sources
or other financial resources required to fund its capital and
operating expenditures and requirements as needed; that the
Corporation's conduct and results of operations will be consistent
with its expectations; that the Corporation will have the ability
to develop the Corporation's properties in the manner currently
contemplated; current or, where applicable, proposed assumed
industry conditions, laws and regulations will continue in effect
or as anticipated; and the estimates of the Corporation's
production and reserves volumes and the assumptions related thereto
(including commodity prices and development costs) are accurate in
all material respects.
Management has included the above summary of risks and
assumptions related to forward-looking statements above and in its
continuous disclosure filings on SEDAR in order to provide
shareholders with a more complete perspective on Advantage's future
operations and such information may not be appropriate for other
purposes. Advantage'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 Advantage 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
news release and Advantage 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.
Oil and Gas Advisories
Barrels of oil equivalent (boe) may be misleading,
particularly if used in isolation. Boe conversion ratios have been
calculated using a conversion rate of six thousand cubic feet of
natural gas equivalent to one barrel of oil. 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. Given that the value ratio based
on the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
References in this press release to production test rates,
flow rates, yields and other short-term production rates are useful
in confirming the presence of hydrocarbons, however such rates are
not determinative of the rates at which such wells will commence
production and decline thereafter and are not indicative of long
term performance or of ultimate recovery. Additionally, such rates
may also include recovered "load oil" fluids used in well
completion stimulation. While encouraging, readers are cautioned
not to place reliance on such rates in calculating the aggregate
production of Advantage. Advantage cautions that the
test results should be considered to be preliminary.
Abbreviations
The following abbreviations used in this press release have
the meanings set forth below:
bbl
|
one
barrel
|
bbls/d
|
barrels per
day
|
boe
|
barrels of oil
equivalent of natural gas, on the basis of one barrel of oil or
NGLs for six thousand cubic feet of natural gas
|
boe/d
|
barrels of oil
equivalent of natural gas per day
|
mcf
|
thousand cubic
feet
|
mcf/d
|
thousand cubic
feet per day
|
mmcf
|
million cubic
feet
|
mmcf/d
|
million cubic feet
per day
|
SOURCE Advantage Oil & Gas Ltd.