CALGARY, ALBERTA--(Marketwire - Jan. 21, 2013) - Strategic Oil & Gas Ltd. ("Strategic" or the "Company") (TSX VENTURE:SOG) is pleased to announce that it has approved a 2013 capital budget of $75 million. The Company will continue to build on its success and dominant position at Steen River. The 2013 capital budget includes drilling 20 gross (18.8 net) wells, 18 gross (18 net) of which will be at Steen River targeting proven light oil producing horizons. The Company has planned for 2 gross (0.8 net) wells being drilled in its non-operated Maxhamish area. Approximately 80% of the total capital budget will be spent on drilling, completion and workover related activities with the balance of $15 million of funds directed to infrastructure development at Steen to facilitate future production increases.
Strategic expects to average 4,000 BOED (93% light oil) of production, representing an 80% increase over the 2012 estimated average production rates. Operating costs are expected to average $15.30 per BOE for 2013, representing a 25% reduction from 2012 estimated costs. Transportation and quality adjustments from West Texas Intermediate pricing are expected to be $15.54/boe. G&A and interest expenses are expected to average $6.66 in 2013, down from $8.35/boe in 2012.
Funds from operations are projected to grow in excess of 100% to approximately $49 million in 2013. The Company expects to fund this capital budget through a combination of cash flow and debt financing through its recently implemented $100 million bank facilities.
Subsequent to the preparation of the budget, the Company has entered into financial hedges for slightly more than 500,000 barrels of oil at an average price of $95/bbl WTI in order to provide greater certainty for the funds from operations.
Strategic announces the appointment of Aaron Thompson as its Chief Financial Officer. Mr. Thompson, a Chartered Accountant, brings over 12 years of senior management experience in the North American energy industry from a number of public oil and gas companies which include Perpetual Energy Inc., Paramount Resources Ltd., Summit Resources Ltd., and Apache Canada Corp. where he held various senior accounting and controller positions. His abilities to motivate people and work effectively in a team environment, promoting closer links between accounting, land and production personnel are seen as a valuable asset to Strategic's continued success. Mr. Thompson graduated in 1996 from the University of Lethbridge with a Bachelor of Management Degree and is a member of the Canadian and Alberta Institutes of Chartered Accountants.
Strategic also announces the appointment of Cody Smith as its Vice President, Operations. Mr. Smith worked the last 25 years of his professional career with pre-merger company AEC and then Encana Corporation. Mr. Smith led teams in Drilling, Completions, Facilities, Production Engineering and Operations and Safety in British Columbia and Alberta. For the last 5 years Mr. Smith held Team Lead positions in the Ft Nelson, Canadian Deep Basin, Cutbank and Bighorn Business Units. He was involved during new play development in the Jean Marie, Horn River, Montney, Alberta Cretaceous stacked plays, and Duvernay. His experience includes liquids rich gas, water, gas storage and heavy oil and participating in internal technical completions and water exchanges for Encana across North America. Mr. Smith has an Honours Diploma in Petroleum Technology from Southern Alberta Institute of Technology.
Strategic is a well-capitalized junior oil and gas company committed to growth by exploiting its light oil assets in Canada. Strategic is primarily focused on implementing development plans for its light oil properties, while continuing to review other high impact light oil resource plays. Strategic's common shares trade on the TSX Venture Exchange under the symbol SOG.