Pinecrest Energy Inc. Provides Update
TSX Venture Exchange: PRY
CALGARY,
Feb. 6, 2013 /CNW/ - Pinecrest Energy
Inc. ("Pinecrest" or the "Company") is pleased to announce its 2013
capital budget, waterflood scheme progress, an increase in its
credit facility, hedging programs, and a management change.
2013 Capital Budget
The Board of Directors of Pinecrest has approved
a 2013 capital budget of $136MM, focused on drilling, completion,
equipping, tie-in and waterflooding the Slave Point light oil
resource play in the Company's greater Red
Earth core area.
The capital and operating assumptions used in
the $136 million budget are as
follows:
- 30-34 Slave Point wells, pipelines, facilities, land,
waterflood and maintenance
- Production exit rate: 6,000 boepd (>98% light oil)
- Price Assumption: US $85WTI per bbl
- Exchange Rate: 1.00 $USD/CDN
- Average crude quality: 39°API
- Royalty rate: ~ 8.6%
- Operating and transportation costs: $14.00 per bbl
The budget is to be financed with a combination
of cash flow and the Company's expanded credit facility, resulting
in projected 2013 year end net debt of $136
million and a debt to forward cash flow ratio of
approximately 1.0.
Waterfloods
The positive results of Pinecrest's joint
waterflood and the historical waterfloods in the great Red Earth area provided the Company with
sufficient confirmatory data to proceed with several waterflood
schemes. In an effort to accelerate the Company's ability to
implement fully developed horizontal well waterflood schemes in
2013, Pinecrest elected to drill 12 gross (12.0 net) infill
horizontal wells in the third and fourth quarters of 2012.
These wells were drilled on three sections of land at eight
horizontal wells per section with 1,400m laterals.
Evi-Project #2
Initial results from the Company's first 100%
operated waterflood scheme ("Evi-Project #2") have been very
encouraging and in accordance with Company expectations.
Uninterrupted water injection commenced on December 20, 2012 and early results have seen oil
production from the offset wells increase from 95 barrels per day
to 280 barrels per day.
Pinecrest has received ERCB approval for four
additional 100% operated waterfloods (Loon-Project #1, Red
Earth-Project #1, Evi-Project #3, Otter-Project #1).
Loon-Project#1 is scheduled for injection mid-February 2013, and the other three through Q2
and Q3 2013. An additional two schemes have been applied for
with approvals anticipated to be obtained within the next four to
five weeks after which all of these projects are scheduled to be
phased in throughout the second and third quarters of 2013.
The locations of the seven waterflood schemes are dispersed
throughout the Greater Red Earth area, encompassing the Evi, Otter,
Loon and Red Earth fields. All of
the proposed waterflood schemes will utilize existing wells and
similar capital costs resulting in the same or better capital
efficiencies as the initial Evi Project #1 waterflood.
Credit Facility
Pinecrest has received an increase to its credit
facility from its Canadian chartered bank. With the recent
drilling success and corresponding increase in production, the
facility has been increased to $155
million from the previous $125
million. This increase reflects the nature of the
Company's high quality, long-life Slave Point light oil assets and
its extensive opportunity base.
Hedging
Cash flow management is an integral part of the
Company's overall business strategy. The risk exposure
inherent in fluctuations in the price of crude oil and natural gas,
the US/Cdn dollar exchange rate and interest rates are monitored by
the Company's management and its Board of Directors. A
hedging policy has been established to mitigate these risks.
At present, the Company has the following hedges in place:
Duration |
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Type |
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Quantity (bbls/d) |
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Price/bbl (Cdn$) |
Calendar 2013
Feb.- Dec. 2013
Feb.- Dec. 2013 |
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Fixed Price Cdn WTI
Fixed Price Edm Light
Fixed Price Edm Light |
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750
500
500 |
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$90.00
$85.75
$84.00 |
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Looking forward, the Company will continue to
monitor prices and strategically hedge up to 50 percent of its
volumes (after royalties) at prices above long term commodity and
budget levels.
Management Change
Effective February 6,
2013, Bill Turko, V.P.
Engineering has stepped down for personal reasons. Pinecrest would
like to thank Mr. Turko for his many contributions to Pinecrest
since inception.
Effective immediately, Darrin Drall has been appointed to the position
of V.P. Engineering. Mr. Drall comes to Pinecrest with 30
years of experience with 12 years in senior management positions in
junior and intermediate oil and gas companies. Mr. Drall will
be a strong addition to the Pinecrest management team.
Advisory
The information in this press release
contains certain forward-looking statements. These statements
relate to future events or our future 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", "expect", "may", "will", "project",
"predict", "potential", "targeting", "intend", "could", "might",
"should", "believe", "would" and similar expressions. In
particular, forward looking statements in this press release
includes, but is not limited to: Pinecrest's capital program and
2013 business objectives, Pinecrest's 2013 budget, oil recovery
rates, royalty rates, operating costs, cash flows, the effects of
waterfloods on recovery factors, decline rates and type curves for
wells, production rates, exit rates for production and bank debt,
downspacing opportunities, the quantity of reserves, and
projections of market prices and costs. These statements involve
substantial known and unknown risks and uncertainties, certain of
which are beyond Pinecrest's control, including: the impact of
general economic conditions; 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; fluctuations in commodity prices and foreign exchange and
interest rates; stock market volatility and market valuations;
volatility in market prices for oil and natural gas; liabilities
inherent in oil and natural gas operations; uncertainties
associated with estimating oil and natural gas reserves;
competition for, among other things, capital, acquisitions, of
reserves, undeveloped lands and skilled personnel; incorrect
assessments of the value of acquisitions; changes in income tax
laws or changes in tax laws and incentive programs relating to the
oil and gas industry; geological, technical, drilling and
processing problems and other difficulties in producing petroleum
reserves. Pinecrest's actual 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 Pinecrest will derive from them. Except as required
by law, Pinecrest undertakes no obligation to publicly update or
revise any forward-looking statements.
Statements relating to "reserves" or
"resources" are deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and
assumptions, that the resources or reserves described can be
profitably produced in the future.
Any references in this news release to
initial production (IP) rates are useful in confirming the presence
of hydrocarbons, however, such rates are not determinative of the
rates at which such wells will continue production and decline
thereafter. While encouraging, readers are cautioned not to
place reliance on such rates in calculating the aggregate
production for the Company.
Neither the 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 news release.
SOURCE Pinecrest Energy Inc.