2011 Production Growth in Line with Plans
CALGARY, June 27 /CNW/ - Stream Oil & Gas Ltd. (TSX-V: SKO) ("Stream" or the "Company") is pleased to provide an operational update on its 2011 development programs. Implementation of various activities on its oil and gas fields are progressing as planned, focusing on the goal of near doubling production in 2011. Current operations are directed towards production increases through enhancing primary recovery at each of the Company's three oilfields. In addition, Stream is undertaking evaluations to substantiate its current enhanced oil recovery ("EOR") programs. The implementation of such programs is expected to enable further conversion of resources to reserves and the deployment of new pilot projects in 2012.
Stream's current average production is over 1,000 barrels of oil equivalent per day, net of royalties. Average net production since the beginning of March 2011 increased by 91% to approximately 920 boed compared to 497 boed in the first fiscal quarter of 2011. Crude sales pricing since March 2011 averaged approximately $80 per barrel, an 80% increase over the $41 realized in the first fiscal quarter of 2011.
New Jet Pumps Meeting Expectations
The net production increase is attributable mainly to the operation of the second jet pump well in the Cakran-Mollaj field. The third jet pump in the field has been installed and is in early testing, while the fourth jet pump addition is in progress with start-up scheduled for mid-July. The second and third jet pump surface equipment units are currently powering two jet pump wells, although each has the capacity to power three individual wells. Following the completion of the fourth well, the Company will proceed with connecting additional wells to the multi-capacity surface units.
With initial oil production rates from wells equipped with jet pumps ranging from 85 to 120 barrels per day, Stream will continue to optimize these installations throughout the summer to establish steady production rates. The Company anticipates having a total of eleven jet pumps installed by the fourth quarter of 2011, nine of which have already been secured. Additional well workovers, including progressive cavity pump ("PCP") workovers, will resume as services free up from the jet pump program. The Cakran-Mollaj jet pump program is fully funded through 2011 from existing cash and cash flow with all crude production being sold in country through the previously announced refinery contract.
Projects on Schedule & Meeting Targets
The Gorisht-Kocul oilfield water injection pilot continues to demonstrate that the water injection program will deliver production increases beyond primary PCP extraction techniques used to date in the field. Stream has scheduled a commercial waterflood program for year-end deployment; future EOR plans contemplate subsequent alternating gas injection. In addition, well reactivations continue according to Stream's 2011 program.
Well reactivation and workover preparations continue at the Ballsh-Hekal oilfield as the Company works on rehabilitating facilities for the imminent takeover of the entire field, which will add an additional 55 wells available for reactivation and workovers. Once takeover is complete, Stream plans to complete 22 reactivations/recompletions to existing wells prior to year-end.
The planned workovers of the two existing Delvina vertical gas wells are on schedule with all rig equipment in country. The remaining fracturing materials are inbound and the rig is expected to commence with the first well within two weeks for the 60 day workover, logging and production testing program. In addition, the location for horizontal drilling in the Delvina lease 34 is in the process of being set up for future drilling.
The Delvina Block exploration program is on schedule with the completion of installation of incremental 3D passive seismic stations to monitor the Delvina vertical well program. Installation of denser grid seismic stations throughout the Block continues, which is expected to enable the drilling of the first exploration well in 2013.
"Progress continues as planned for our 2011 development program with most of the required equipment already in place," said Sotirios Kapotas, President and Chief Executive Officer. "We're pleased with the results of our activities to date, which set us up to meet our 2011 production exit goal while laying the foundation for future growth through EOR projects in 2012 and beyond. At the same time, we continue to pursue the means to finance growth acceleration programs for the conversion of resources to reserves and the drilling of a horizontal well in the Delvina gas field."
Refiling of First Quarter 2011 Financials
Stream announces that it has restated and refiled its financial and operating results for the first quarter ended February 28, 2011 to account for the result of an initial assessment for asset retirement obligations ("ARO") on the Company's recently taken over Gorisht-Kocul oilfield in Albania. Based on this assessment, Stream booked an additional $272,446 to ARO; the adjustment does not impact the Company's cash position or its ongoing exploration and business activities. The full text of the restated Management's Discussion and Analysis ("MD&A") and the unaudited consolidated financial statements can be found on Stream's website at www.streamoilandgas.com and at www.sedar.com.
Information in this news release respecting matters such as plans of development or exploration, reserves estimates, production estimates and targets, development costs, work programs and budgets constitute forward-looking information (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations. Such forward-looking information is based on certain assumptions, including the availability of funds for capital expenditures necessary to construct the infrastructure required for future development, a favorable political and economic operating environment, a consistent rate of well re-completions and costs, success rates, production performance and build-up periods for well re-completions that are consistent with or an improvement over historical levels.
The forward-looking statements contained herein are made as of the date of this release solely for the purpose of generally disclosing Stream's current status of its operational projects and the restatement of its first quarter 2011 financial results. Investors are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. Such forward-looking information reflect management's current beliefs and are based on assumptions made by and information currently available to the Company, and involves known and unknown risks, uncertainties and other factors which may cause the actual costs and results of the Company and its operations to be materially different from estimated costs or results expressed or implied by such forward-looking statements. Such factors include, among others political and economic risks associated with foreign operations, general risks inherent in petroleum operations, risks associated with equipment procurement and equipment failure, availability of qualified personnel, risks associated with transportation, currency and exchange rate fluctuations and other general risks inherent in oil and gas operations.
Although the Company has attempted to take into account important factors that could cause actual costs or results to differ materially, there may be other factors that cause costs and timing of the Company's program or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances except as required under applicable securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses production and reserve volumes on a barrel of oil equivalent (Boe) basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet of natural gas to one barrel of oil. Boe 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.
About Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based emerging oil and gas production, development and exploration company focused on the re-activation and re-development of three oilfields and a gas/condensate field in Albania. The Company's strategy is to use proven technology, incremental and enhanced oil recovery techniques to significantly increase production and reserves.
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.
SOURCE Stream Oil
For further information: Dr. Sotirios Kapotas, President & Chief Executive Officer, P: (403) 531-2358; James Hodgson, Chief Financial Officer, P: (403) 531-2358, Email email@example.com, Website: www.streamoilandgas.com