The Company has acquired six sections of
mineral rights in the Cold Lake Oil Sands Area with approximately
40 unbooked horizontal drilling locations targeting the Mannville
Stack and achieved record production after its two-well
Killam drilling
program
CALGARY,
AB, Oct. 28, 2024 /CNW/ - Westgate Energy Inc.
("Westgate" or the "Company") (TSXV: WGT), a
high-growth junior exploration and production company that is
targeting untapped Mannville Stack medium and heavy oil resources
in East-Central Alberta and West Central Saskatchewan, announces
the acquisition of a new core area with approximately 40 unbooked
multi-lateral drilling locations identified within the Mannville
Stack group of formations. In addition, Westgate confirms the
production results of its summer program consisting of two
horizontal, multi-lateral oil wells drilled at the Company's core
Killam property in Eastern Alberta (the "Summer Program
Wells").
New Core Area
Westgate has acquired a 100% working interest in six sections
(1,536 hectares) of mineral rights in the Cold Lake Oil Sands Area
of Alberta (the "New Core
Area") as part of a partnership agreement with Elizabeth Metis
Settlement ("EMS") that grants access to the EMS lands for
the purposes of developing oil and gas resources. Westgate has
identified the potential for up to 40 horizontal drilling locations
across multiple horizons within the Mannville Stack group of
formations in the New Core Area. The land has year-round road
access and is proximal to other successful Mannville Stack
developments.
Killam Summer Program Results
At Killam, the 11-21 well
("11-21") was successfully drilled as a six-leg, open-hole
horizontal design, targeting the Mannville Sparky Formation drilled
from a new pad. A total of 5,438 metres of lateral length was
drilled in zone and the cost to drill and complete ("D&C
Costs") 11-21 came in under budget at $1.33mm versus a D&C estimate of $1.6mm. After a period of clean-up, its recent
production rate is approximately 130 boe/d, with a 90% oil
weighting.
The 16-15 well ("16-15") was successfully drilled as a
four-leg, open-hole horizontal design, also targeting the Mannville
Sparky Formation. A total of 5,197 metres of lateral length drilled
and the D&C Costs for 16-15 also came in under budget at
$1.4mm versus a D&C estimate of
$1.6mm. After a period of clean-up,
its recent production rate is approximately 65 boe/d, with an 80%
oil weighting.
The below table compares the well results of 11-21 and 16-15
against the Company's base case. Westgate currently budgets
drilling and complete ("D&C") costs of $1.6mm per well drilled to a planned 8,000 meters
of lateral length and assumes stabilized production rates of 155
boe/d from each such successfully drilled well (the "Type
Well"). Based on the nature of Westgate's land holdings at
Killam, the Summer Program Wells
were drilled to an average total of 5,318m of lateral length, representing 66% of our
Type Well length.
Well Results
Summary
|
|
|
|
|
|
Productivity
|
Capital
|
|
D&C
Capex
|
Meters
|
Production
|
Productivity
|
%
of
|
Efficiency
|
Well
|
($MM)
|
Drilled
|
boepd
|
(boe/d/100m)
|
Base
Case
|
($/boe/d)
|
11-21
|
$1.33
|
5,438
|
130
|
2.4
|
123 %
|
$10,197
|
16-15
|
$1.40
|
5,197
|
65
|
1.3
|
65 %
|
$21,552
|
Base Case
|
$1.60
|
8,000
|
155
|
1.9
|
na
|
$10,323
|
Management Commentary
Westgate's Management is excited about the New Core Area and
will be prioritizing development of these new lands and the
approximately 40 drilling locations across multiple, stacked
oil-bearing Mannville horizons.
These six sections significantly bolster Westgate's horizontal
drilling inventory. We look forward to a long-standing working
relationship well into the future with the Elizabeth Metis
Settlement.
Regarding our increased production level, we are pleased with
the outcome of our two-well summer program, with both wells
producing within our range of expectations on a normalized
per-meter basis.
Westgate is also pleased with the significant reduction in well
costs achieved by our team and service providers on this
program.
Guidance Update
With Westgate's entry into the Cold Lake Oilsands Area, the
Company will pause its previously budgeted capital expenditures for
the fourth quarter of 2024 at Killam and shift its focus to Cold Lake. As a result of the deferral of the
Q4 Killam well, the Company's new
2H/24 production is forecasted to be 250 boe/d with a December 2024 exit rate of 270 boe/d, and a 67%
crude oil and liquids weighting. Current corporate production is
320 boe/d with a 68% crude oil and liquids weighting.
Q4 will be spent on designing and planning our first drilling
program in the New Core Area. The Company anticipates providing an
updated 2025 capital budget in the near term.
Westgate's Strategy
Westgate is focused on the emerging Mannville Stack Fairway
located in East-Central Alberta and West Central Saskatchewan. This
Fairway is characterized by known accumulations of medium and heavy
oil which are being 'unlocked' via the application of innovative
drilling techniques that utilize multi-lateral horizontal drilling.
Applying these multi-lateral drilling techniques has yielded some
of the strongest oil well economics across Western Canada.
The management team and board of Westgate have extensive
experience building and leading successful energy companies in
Canada. The collective successes
of the leadership group share common characteristics: a strategy of
targeting high-quality oil assets with large quantities of
oil-in-place, and driving growth through successful drilling as
well as strategic merger and acquisition opportunities. This proven
blueprint of delivering shareholder value will be foundational to
Westgate's strategy, positioning the Company as one of a select few
pure-play, high-growth, publicly-traded junior oil companies
focused on the Mannville Stack Fairway.
For more information, please visit www.westgateenergy.ca.
Abbreviations
bbl
barrel of oil
boe
barrel of oil equivalent
boe/d
barrel of oil equivalent per day
Mcf
thousand cubic feet
Reader Advisories
In this press release, all references to "$" are to Canadian
dollars.
Oil and Gas Advisories
Barrels of Oil Equivalent
Boe may be misleading, particularly if used in isolation. In
accordance with National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities, a conversion ratio for
conventional natural gas of 6 Mcf:1 bbl has been used, which is
based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. In addition, utilizing a conversion on
a 6 Mcf:1 bbl basis may be misleading as an indicator of value as
the value ratio between conventional natural gas and heavy crude
oil, based on the current prices of natural gas and crude oil,
differ significantly from the energy equivalency of 6 Mcf:1
bbl.
Oil and Gas Metrics
This press release contains metrics commonly used in the oil and
gas industry, including "D&C Costs" and "Capital Efficiency".
These metrics have been prepared by management and do not have
standardized meanings or standardized methods of calculation, and
therefore such measures may not be comparable to similar measures
presented by other companies and should not be used to make
comparisons. Such measures are not reliable indicators of the
future performance of the Company, and future performance may not
compare to the performance in prior periods, and therefore such
metrics should not be unduly relied upon. The Company uses these
oil and gas metrics for its own performance measurements and to
provide shareholders with measures to compare the Company's
operations over time. "D&C Costs" includes all capital spent to
drill and complete a well and "Capital Efficiency" is calculated by
dividing D&C Costs by the applicable production expressed in
$/boe/d.
Drilling Locations
Unbooked drilling locations are the internal estimates of
Westgate based on the acquired assets prospective acreage and an
assumption as to the number of wells that can be drilled per
section based on industry practice and internal review. Unbooked
locations do not have attributed reserves or resources (including
contingent and prospective). Unbooked locations have been
identified by the Company's management as an estimation of the
Company's multi-year drilling activities based on evaluation of
applicable geologic, seismic, engineering, production and reserves
information. There is no certainty that Westgate will drill all
unbooked drilling locations and if drilled there is no certainty
that such locations will result in additional oil and natural gas
reserves, resources or production. The drilling locations on which
the Company will actually drill wells, including the number and
timing thereof is ultimately dependent upon the availability of
funding, regulatory approvals, seasonal restrictions, oil and
natural gas prices, costs, actual drilling results, additional
reservoir information that is obtained and other factors. While a
certain number of the unbooked drilling locations have been
de-risked by Westgate drilling existing wells in relative close
proximity to such unbooked drilling locations, the majority of
other unbooked drilling locations are farther away from existing
wells where management of Westgate has less information about the
characteristics of the reservoir and therefore there is more
uncertainty whether wells will be drilled in such locations and if
drilled there is more uncertainty that such wells will result in
additional oil and gas reserves, resources or production.
Notice regarding forward-looking statements:
This press release includes forward-looking statements
regarding Westgate and its business, which may include, but are not
limited to, the drilling locations at Cold Lake, the resumption of the planned
1-well Q4 program at Killam, the
drilling and spudding of wells and timing thereof, the expected
2H/24 production, the expected announcement of initial production
results and timing thereof, the business and growth prospects of
Westgate, and the characteristics of the Mannville Stack Fairway
and the unique position of Westgate in respect thereof. Often, but
not always, forward-looking statements can be identified by the use
of words such as "plans", "is expected", "expects", "scheduled",
"intends", "contemplates", "anticipates", "believes", "proposes" or
variations (including negative variations) of such words and
phrases, or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
The forward-looking statements included in this press release are
based on management's current expectations and assumptions,
including, but not limited to, the successful drilling of the two
well program at Cold Lake and
production therefrom, the expected time to drill, complete, equip
and tie-in each of the two planned wells, the Company's ability to
execute its business strategy and market conditions. Although the
Company believes that the expectations and assumptions reflected in
such forward-looking information are reasonable, they may prove to
be incorrect. Forward-looking statements involve significant known
and unknown risks and uncertainties. A number of factors could
cause actual results to differ materially from those anticipated by
the Company, including but not limited to, an increase in the time
to drill the two planned wells and bring on to production,
production from wells being less than anticipated, decreases in the
price of oil and natural gas and changes in market conditions.
Moreover, exploration, appraisal, and development of oil and
natural gas reserves are speculative activities and involve a
degree of risk. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results to differ from those anticipated,
estimated or intended. No forward-looking statement can be
guaranteed. Except as required by applicable securities laws,
forward-looking statements speak only as of the date on which they
are made and the Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events, or otherwise, other than as
required by law.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
SOURCE Westgate Energy Inc.