CALGARY, Feb. 1 /CNW/ - Cequence Energy Ltd. ("Cequence" or the "Company") (TSX: "CQE") is pleased to provide the following operational update on its ongoing capital program. In the first quarter of 2010 the Company expects to spend $30 million concentrating its drilling efforts on its Basal Doig/Montney development in the Sinclair area and various prospects in the Peace River Arch area of Alberta.
At Sinclair, Cequence continues to have success delineating and extending the size of the Basal Doig natural gas pool. The company has drilled and completed two (100 % working interest) horizontal wells targeting the Basal Doig. The 12-09-75-13W6 well tested at 5mmcf/day at 1300psi (as previously disclosed on December 21/2009) and the 13-33-75-12W6 well tested at 3.5mmcf/day at 500psi. The 12-09 well is waiting on tie-in and the 13-33 well is expected to be on production in February 2010. Based on the results of these horizontal wells and vertical 'pilot' holes drilled to date, Cequence believes that the Basal Doig reserves have been proven on five sections of its Sinclair lands which are expected to ultimately be developed with four wells per section. The Company is pleased with the initial results from the Basal Doig wells and plans to drill additional wells in the second half of 2010.
The Company is currently drilling its first Lower Montney horizontal well. If successful, an additional 56 Lower Montney locations, on the Company's 14 (100% working interest) sections in Sinclair, could be added to Cequence's future drilling program. The Company's land position at Sinclair represents a great foothold in a dynamic resource play. Management expects that this large resource will yield a high degree of repeatability and future reserve growth. Cequence is currently reviewing alternatives with industry partners for long term gas processing capacity at Sinclair.
The Sinclair wells are eligible for the Alberta royalty incentives and deep well royalty program that significantly enhance the economics of the play. The royalty programs are applicable to both the Basal Doig and Lower Montney formations and, if fully utilized, equate to a benefit of approximately $3.0 million per well.
At Gordondale, Cequence drilled a 100 percent working interest Lower Montney horizontal well. The well directly offsets existing Montney production with initial rates ranging from 2.5 to 5.8mmcf/day. The well is tied-in to facilities and production is expected to commence by the end of March 2010. Field optimization to increase liquids recovery and lower operating costs are currently underway.
At Valhalla and Knopcik, Cequence expects to drill four vertical wells in the first half of 2010. The first well was drilled and cased in January, and is scheduled to be completed and tied-in mid March. Offset wells from the same zone have come on production with initial rates ranging from 2.0 to 3.0mmcf/day.
Cequence has continued an active work over program on the Peace River Arch assets purchased in Q3 2009. The Company has been successful in recompleting 7 wells that are all tied in to existing Cequence facilities. Several more recompletions are scheduled for the remainder of 2010.
Cequence averaged approximately 2,100 boepd in the fourth quarter of 2009 and expects that it exited 2009 with a positive working capital balance of $5-7 million. The Company's $45 million operating line was undrawn at year-end.
Cequence is scheduled to report year end reserves on March 4, 2010 and financial results for the year ended December 31, 2009 on March 18, 2010.
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: operational decisions and the timing thereof, development and exploration plans and the timing thereof; and future production levels. 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 the Company believes that the expectations reflected in such forward-looking information is reasonable, undue reliance should not be placed on forward-looking information because the Company can give no 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: field production rates and decline rates; the ability of the Company to secure adequate product transportation; the impact of increasing competition in or near the Company's Doig / Montney plays; the timely receipt of any required regulatory approvals; the ability of the Company 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 the Company 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 the Company 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 the Company and described in the forward-looking information. The material risk factors affecting the Company and its business are contained in the Company's Annual Information Form which is available under the Company'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 the Company 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 statement.
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.
The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release.
SOURCE Cequence Energy Ltd.
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