CALGARY, Jan. 21, 2014 /CNW/ - Cequence Energy Ltd. ("Cequence" or the
"Company") (TSX: CQE) is pleased to announce expansion of its project
at Ansell and production of 12,000 boepd.
Cequence is pleased to announce the initial success of the Company's
Wilrich drilling program at Ansell and the addition of key lands
increasing its total landholdings to 46.5 gross sections. The most
recent Wilrich well was drilled at 14-19 (49 % working interest) and
tested at 2,500 boepd, and has produced for 60 days at an average
restricted rate of 960 boepd. Two Ansell wells have been completed to
date and are ahead of the Company's model expectation. Current net
production in the Ansell area is approximately 650 boepd and is
restricted by production facilities. One additional Wilrich well was
drilled in the first quarter and is awaiting completion and two
additional horizontal wells are currently drilling.
The first quarter capital program at Ansell is expected to include six
wells (3 net) and the construction of gathering and compression
facilities to increase production capacity to approximately 40
mmcf/day. Five of the six wells are scheduled to be 'earning wells'
where Cequence pays 15% of the capital cost to retain a 49% working
interest with the sixth well scheduled to be drilled at the Company's
49% working interest.
Drilling to date at Ansell has identified the Notikewin and Falher
formations as prospective secondary targets on Cequence acreage.
Cequence's partner is shooting a 135 square kilometer 3D seismic
program to both focus the Wilrich drilling program and image these
additional potential targets. With the recent addition of contiguous
and highly prospective lands, continued drilling success by Cequence
and other operators in the area, the acquisition of 3D data and
construction of the gathering system, Ansell is considered a new core
area by the Company. Pending results from the initial wells and the
ongoing plans of the Company's partner in the area, Cequence may direct
additional capital to this area in 2014 to drill additional Wilrich
wells and add production facilities.
In the fourth quarter of 2013, Cequence completed a 65% working interest
Dunvegan well at 5-2. The well was recently put on production at
restricted gross production rates of 10.0 mmcf/d of natural gas and 300
bbls/day of free condensate. The 5-2 well is a follow-up to the
Company's 10-2 well that has produced 2.5 bcf since commencing
production in February 2013.
Montney development at Simonette is ongoing with three wells drilled in
the fourth quarter of 2013. The 10-24 well was recently brought on
production at restricted rates of 5.0 mmcf/d and 75 bbls/d of free
condensate at flowing casing pressure of 1,715 psi. The 10-24 well is
located on a new padsite located 1.5 miles from existing offset Montney
development. The remaining two Montney wells were drilled off the 7-29
padsite and experienced mechanical difficulties on
completion. Diagnostic tools were run on both wells and Cequence is
currently evaluating remediation plans. It is anticipated that
completions will be able to be performed on these wells. These two
wells offset Cequence's best liquids producers at 9-21 and 3-21.
A Montney exploration well at 16-10-61-01W6 is currently drilling and
will be the first test on the southwestern Montney acreage at Simonette
which the Company has a 100% working interest. Management believes the
geologic data observed from the open hole logs of the full Montney
section is encouraging. The well is expected to be completed in the
first quarter of 2014. If successful, management believes 16-10 would
derisk Montney acreage on the western portion of Simonette where the
Company's reserves evaluators have not previously assigned any Montney
reserves or resources.
In addition, Cequence has drilled a Wilrich well at 13-30-61-26W5. The
13-30 well is a significant step out from the producing Wilrich wells
at Simonette in an area where the Company's reserves evaluators have
not previously assigned any Wilirch reserves. The 13-30 well is
expected to be completed in February 2014.
The Company currently has two operated rigs drilling at Simonette.
Based on field estimates, production for 2013 averaged 10,200 boepd (56
mmcfd of gas and 1,500 bpd of liquids), which is slightly higher than
the Company's previously provided production guidance of 10,000 boepd
for the year. The 2013 average production represents an increase of 13
percent above 2012 average production.
Based on field estimates, production recently reached 12,000 boepd with
the tie-in of the 5-2 Dunvegan well and the completion of our 10-24
Montney well, both at Simonette, both of which wells are currently
restricted. Cequence has recently maximized field capacity at Simonette
and Ansell. The 13-11 compression facility at Simonette is being
expanded and capacity is expected to reach 70 mmcf/d in early
February. Cequence expects to complete an additional 10 gross (7 net)
wells in the first quarter of 2014.
Production from the 3-31 and 15-31 Montney wells completed in Q4 2013
have each averaged 860 and 844 boepd (11% condensate), respectively,
for the first 60 days of restricted production. Production from both
wells is better than the Company's model expectations. The 14-1 Montney
well completed in Q4 has produced at an average of 590 boepd (9%
condensate) for the first 60 days. This is slightly below the Company's
Montney model expectation.
Cequence has now hedged approximately 50% of its 2014 forecast gas
production at an average gas price of Cdn $4.00 per mcf.
Cequence is a publicly traded Canadian energy company involved in the
acquisition, exploitation, exploration, development and production of
natural gas and crude oil in western Canada. Further information about
Cequence may be found in its continuous disclosure documents filed with
Canadian securities regulators at www.sedar.com.
Forward Looking Information
Certain information included in this press release constitutes
forward-looking information under applicable securities legislation.
Such forward-looking information is provided for the purpose of
providing information about management's current expectations and plans
relating to the future. Readers are cautioned that reliance on such
information may not be appropriate for other purposes, such as making
investment decisions. Forward-looking information typically contains
statements with words such as "anticipate", "believe", "expect",
"plan", "intend", "estimate", "propose", "project" or similar words
suggesting future outcomes or statements regarding an outlook.
Forward-looking information in this press release may include, but is
not limited to, information with respect to: business strategies;
operational decisions and the timing thereof, development, remediation
and exploration plans and the timing thereof, including the likelihood
that wells will become productive; future production rates and expected
production volumes; the number and quality of future potential drilling
locations; capital allocations; drilling plans; the derisking of
Company acreage; and facility development, expansion and future
capabilities. Forward-looking information is based on a number of
factors and assumptions which have been used to develop such
information but which may prove to be incorrect. Although
Cequence believes that the expectations reflected in its
forward-looking information is reasonable, undue reliance should not be
placed on forward-looking information because Cequence cannot give
assurance that such expectations will prove to be correct. In addition
to other factors and assumptions which may be identified in this press
release, assumptions have been made regarding and are implicit in,
among other things: cash flow projections and netbacks; anticipated
operating costs; bank debt levels; reserves; field production rates and
decline rates; the ability of Cequence to secure adequate product
transportation; the timely receipt of any required regulatory
approvals; the ability of Cequence to obtain qualified staff, equipment
and services in a timely and cost efficient manner to develop its
business; Cequence's ability to operate the properties in a safe,
efficient and effective manner; the ability of Cequence to obtain
financing on acceptable terms; the ability to replace and expand oil
and natural gas reserves through acquisition, development of
exploration; the timing and costs of pipeline, storage and facility
construction and expansion; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework
regarding royalties, taxes and environmental matters; and the ability
of Cequence to successfully market its oil and natural gas products.
Readers are cautioned that the foregoing list is not exhaustive of all
factors and assumptions which have been used.
Forward-looking information is based on current expectations, estimates
and projections that involve a number of risks and uncertainties which
could cause actual results to differ materially from those anticipated
by Cequence and described in the forward-looking information. The
material risk factors affecting Cequence and its business are contained
in Cequence's Annual Information Form which is available under
Cequence's issuer profile on SEDAR at www.sedar.com. The
forward-looking information contained in this press release is made as
of the date hereof and Cequence undertakes no obligation to update
publicly or revise any forward-looking information, whether as a result
of new information, future events or otherwise, unless required by
applicable securities laws. The forward looking information contained
in this press release is expressly qualified by this cautionary
BOEs are presented on the basis of one BOE for six Mcf of natural gas.
Disclosure provided herein in respect of BOEs may be misleading,
particularly if used in isolation. 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.
For the year ended December 31, 2013, the ratio between the average
price of West Texas Intermediate ("WTI") crude oil at Cushing and NYMEX
natural gas was approximately 27:1 ("Value Ratio"). The Value Ratio is
obtained using the 2013 WTI average price of $97.97 (US$/Bbl) for crude
oil and the 2013 NYMEX average price of $3.67(US$/MMbtu) for natural
gas. This Value Ratio is significantly different from the energy
equivalency ratio of 6:1 and using a 6:1 ratio would be misleading as
an indication of value.
A pressure transient analysis or well-test interpretation has not been
carried out on certain wells and thus certain of the test results
provided herein should be considered to be preliminary until such
analysis or interpretation has been completed. Readers are cautioned
that the foregoing well test results are not necessarily indicative of
long-term performance or of ultimate recovery.
The Toronto Stock Exchange has neither approved nor disapproved the
contents of this press release.
SOURCE Cequence Energy Ltd.