Magnum Energy Inc. Provides Operations Update
09 June 2011 - 12:53AM
Marketwired
MAGNUM ENERGY INC. (the "Corporation") (TSX VENTURE: MEN) is
pleased to provide an update on its planned operations.
In Provost, the Company has fracture stimulated one of the
producing vertical wells which was drilled and perfed in February,
2010. The well was producing approximately 5 barrels of oil per day
prior to the frac and is currently being prepared for clean up and
flow testing. The results of this well, expected later this week,
will be evaluated to determine the future operations on other
vertical wells on the property.
As disclosed in Magnum's news release of February 3, 2011, our
joint venture partner is required to pay 100% of the costs to drill
and complete to tie-in two horizontal wells to earn a 50% working
interest in certain lands in the Provost area, with work to
commence on the first well before June 30th. Technical work and the
drilling application are ahead of schedule and barring any
unforeseen adverse weather, the drilling of the first horizontal
well should commence in the next 7 to 10 days. Under the terms of
the joint venture agreement, the second horizontal well is to be
spudded within 30 days of the completion of the first well.
The Company is also preparing to build a new battery that will
be able to service future increases in oil production from the
Provost area wells. This is a sweet light crude conventional oil
battery. The planned facilities will include about a 1500 bopd
treater, a geotextile lined and diked tank farm comprised of oil
tanks and a fiberglass produced water tank, a pipeline header
system, a test separator and a water injection pump. Provision for
future expansion will include room for additional tanks and a
future free-water knockout vessel. By coordinating the completion
of the battery with the completion of the first horizontal well,
the Company will recognize substantial operating cost savings.
In Sedalia, Magnum is planning one re-entry and four workovers.
The operation programs vary from a simple stimulation in a wellbore
with bypass pay in a proven zone, to fracture stimulations of
existing producing zones. With break up over and road bans removed,
the Company plans to complete these operations over the balance of
the summer.
During the past winter months, the Sedalia area experienced one
of the worst winter seasons on record. As a result, the Company
shut in production in several wells due to increased operational
costs associated with these extreme conditions. This production
will be brought back on stream as we work through our summer
operations, as several of the wells that have been shut in also
have workover operations. With spot AECO gas prices currently at
$4.25/mcf, Magnum's inventory of twelve 100% owned horizontal
drilling locations in the immediate vicinity of its gas plant at
Sedalia will be revisited. Gas prices consistently in the $5.00/mcf
range could result in a fall or winter horizontal gas drill program
to fill the plant capacity.
Over the past few quarters the Company has completed the
acquisition of the Viking oil property, a joint venture partnership
to minimize capital costs and share dilution, and a financing in
May for just over $3 million. The successful completions of these
corporate goals have provided the Company with the ability to
transition to a more balanced oil to natural gas production mix
going forward. Magnum will evaluate the results of its summer
operations to determine the size and focus of its fall and winter
drilling operations.
Forward looking statements
This news release contains certain forward-looking statements,
including management's assessment of future plans and operations
and capital expenditures and the timing thereof, that involve
substantial known and unknown risks and uncertainties, certain of
which are beyond Magnum's control. Such risks and uncertainties
include, without limitation, risks associated with oil and gas
exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices,
currency fluctuations, imprecision of reserves estimates,
environmental risks, competition from other producers, inability to
retain drilling rigs and other services, delays resulting from or
inability to obtain required regulatory approvals and ability to
access sufficient capital from internal and external sources, the
impact of general economic conditions in Canada, the United States
and overseas, industry conditions, changes in laws and regulations,
including the adoption of new environmental laws and regulations,
and changes in how they are interpreted and enforced, increased
competition, the lack of availability of qualified personnel or
management, fluctuations in foreign exchange or interest rates,
stock market volatility and market valuations of companies with
respect to announced transactions and the final valuations thereof,
and obtaining required approvals of regulatory bodies. Actual
results could differ materially from those expressed in or implied
by these forward-looking statements. No assurances can be given
that any of the events anticipated by any forward-looking
statements will transpire or occur, or if any of them do so, what
benefits Magnum will derive therefrom. Readers are cautioned that
the foregoing list of factors is not exhaustive. All subsequent
forward-looking statements, whether written or oral, attributable
to Magnum or persons acting on behalf are expressly qualified in
their entirety by these cautionary statements. The forward-looking
statements contained in this news release and the documents
referred to herein, are made as at the date of this news release,
and Magnum does not undertake any obligation to update publicly or
to revise any of the included forward-looking statements, whether
as a result of new information, future events or otherwise, except
as may be required by applicable securities laws.
Petroleum and natural gas volumes are converted to an equivalent
measurement basis referred to as a "barrel of oil equivalent" (boe)
on the basis of 6 thousand cubic feet of natural gas equaling 1
barrel of oil. This is based on an energy equivalency conversion
method applicable at the burner tip and does not necessarily
represent a value equivalency at the wellhead. Readers are
cautioned that boe figures may be misleading, particularly if used
in isolation.
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.
Contacts: Magnum Energy Inc. Mr. Richard Nemeth President &
CEO (604) 669-3155 rnemeth@magnumenergyinc.com
www.magnumenergyinc.com
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