CALGARY, Jan. 20 /CNW/ - Highpine Oil & Gas Limited (TSX: HPX)
("Highpine" or the "Company") is pleased to provide the following information.
Pembina Nisku Oil Discoveries
A recent discovery in the Berrymoor area at 9-5-50-6 W5M (9-5)
encountered 26 metres of Nisku hydrocarbon pay based on openhole logs.
Highpine has a 25% working interest in the 9-5 well.
Highpine recently tested its first Nisku oil discovery in the Tomahawk
area at 9-21-50-6 W5M (9-21), which completed drilling in mid-December 2008.
The 100% working interest 9-21 well encountered a porous Nisku reef with a 9
metre oil column. The 9-21 well has been tested at rates up to 1,200 bbl/d
(192 m3/d) of clean oil with a gas-oil-ratio (GOR) of 510 scf/bbl (90 m3/m3)
and a flowing pressure of 740 psi (5 125 kpa). The oil has an API gravity of
43, and the solution gas has an H(2)S concentration of 11%.
A number of follow up locations are licensed and Highpine has three rigs
currently drilling in the Pembina area.
Including the 9-21 Nisku oil well, Highpine drilled 16 (13.6 net) wells
during the fourth quarter of 2008, resulting in three (2.6 net) oil wells, ten
(8 net) wells that have been or will be completed for gas, and three (3 net)
During the fourth quarter, 100% drilling success continued at
Pembina/Brazeau and Ansell. The Company drilled four (4 net) Rock Creek gas
wells at Pembina/Brazeau and five (3 net) multi-zone gas wells at Ansell.
Highpine's first Pembina/Brazeau horizontal Rock Creek gas well is on
production at approximately 200 boe/d and four (1.9 net) wells at Ansell are
on production at approximately 450 boe/d net.
In late 2008, Highpine received approval from the Alberta Energy
Resources Conservation Board ("ERCB") for the drilling of three additional
wells in the Tomahawk area of Alberta. The Company participated in two ERCB
hearings during 2008 for the drilling of Nisku wells in the Tomahawk area, and
was successful in receiving ERCB approval for ten wells in total. The Company
intends to execute an active 2009 Nisku drilling program in this area.
Recent First Quarter 2009 Developments
Highpine successfully completed and tested the 100% working interest
7-5-48-10 W5M (7-5) well drilled to the Nisku in November 2008 at a gas rate
of 1.4 MMcf/d (40 e3m3/d) at minimal drawdown. A hydrocarbon fluid rate,
normally associated with Nisku gas wells in this area, has not been
established yet. Tie-in of the well is expected later this quarter.
Highpine also tested the 100% working interest well 13-16-47-11 W5M
(13-16). The 13-16 well is Highpine's second planned horizontal well into the
Pembina Rock Creek formation which reached total depth in 4Q2008 after
drilling 585 metres of horizontal lateral length. The well was completed with
a six stage fracture stimulation, and last tested at 2 MMcf/d (56 e3m3/d) of
gas, and 150 bbl/d (24 m3/d) of light oil while still cleaning up.
Highpine estimates that 2008 production will average approximately 19,200
boe/d, up 8% from the 2007 actual average of 17,736 boe/d. Production was
slightly below guidance due to a regulatory imposed production curtailment at
the Pembina Nisku WW pool 16-36-48-8W5 (16-36) well through much of the last
half of 2008. This was in addition to other well and facility down time that
resulted from severe cold weather experienced in west central Alberta in
December. In mid December 2008 Highpine received ERCB approval to re-commence
production from the 16-36 Nisku well under single well good production
practice (GPP). The 16-36 well had been shut-in since July 2008.
2009 Capital Budget
Highpine's 2009 capital program will approximate expected annual cash
flow. Given the volatility in commodity prices and the number of drill ready
prospects in Highpine's inventory, the Board of Directors of Highpine approved
a $75.5 million capital budget for the first half of 2009. Capital spending
for the second half of 2009 will be assessed in the second quarter based on
the commodity price outlook at that time, drilling success, and consideration
given for other opportunities or cash requirements.
2009 Drilling Plans
The Company intends to complete a significant drilling program during the
first half of 2009. This includes participation in the Tay River Leduc
prospect, three Nisku oil exploration wells on the Wayne/Rosedale farm-in
lands, a horizontal well in the Mannville Group at Ansell, the first test well
on the recently acquired Montney acreage in northwest Alberta, and continued
drilling in the Company's traditional core areas of Pembina/Brazeau/Tomahawk
and the West Central Gas Fairway.
Highpine's exploration focus during the first half of 2009 is to target
prospects that have significant hydrocarbon resource upside. Success on the
Wayne/Rosedale, Tomahawk, and Montney lands have the potential to confirm
multi-year drilling programs in our existing prospect inventory.
Currently there are three (2.9 net) Pembina/Brazeau Nisku wells and two
(0.9 net) west Central Alberta wells drilling, including the non-operated Tay
2009 Production Outlook
Second half 2008 drilling success has resulted in nine gas wells that are
being tied in, and are expected to add an aggregate of 15 MMcf/d of net
production by the end of the first quarter of 2009.
Given the Company's current production capability and a capital budget of
only $75.5 million for the first half of 2009, Highpine's production for 2009
is expected to be approximately flat to 2008 average production.
For 2009, Highpine has hedged US $24.0 million (US$2.0 million per month)
of foreign currency at an exchange rate of 1.2850 CAD/USD (0.778 USD/CAD).
The Company has also hedged 4,000 GJ's/d of natural gas at CAD $6.25/GJ
for the period January 1 to October 31, 2009.
"We are very pleased to announce our first commercial Nisku discovery in
the Tomahawk area," stated Jonathan Lexier, President and Chief Executive
Officer. "This gives credence to the prospectivity we have always believed
existed in the area, and supports our plans to continue drilling in the area."
Mr. Lexier added "Highpine intends to be an active driller in the first
and second quarters of 2009. The objective of this drilling is to evaluate our
expansive opportunity base and broaden our understanding of the technical
merits, costs structures and economics of strategic areas. This is critical to
determining the intrinsic value of our opportunity base and make plans for our
future. Despite lower near-term projected cash-flows, we believe that
shareholders are best served by undertaking these projects at this time. We
are fortunate to have the financial flexibility to execute on this plan."
Updated Corporate Presentation
An updated corporate presentation will be posted on the Highpine website
at www.highpineog.com. before the market opens tomorrow.
Highpine is a Calgary-based oil and natural gas company engaged in
exploration for and the acquisition, development and production of natural gas
and crude oil in western Canada. Highpine's current exploration and
development efforts are focused in the West Pembina Nisku and West Central
Alberta Gas Fairway, both located in Central Alberta. The Company's common
shares trade on the Toronto Stock Exchange under the symbol "HPX".
Certain information in this news release contains forward-looking
statements including management's assessment of future plans and operations of
Highpine, expectations of future production, and plans for and results of
exploration and development activities and other operational developments.
These forward-looking statements are subject to numerous risks and
uncertainties, certain of which are beyond Highpine's control including,
without limitation, risks associated with oil and gas exploration,
development, exploitation, production, marketing and transportation, risks
associated with sour hydrocarbons, changes to the proposed royalty regime
prior to implementation and thereafter, loss of markets, volatility of
commodity prices, currency fluctuations, imprecision of reserve estimates,
environmental risks, competition from other producers, inability to retain
drilling rigs and other services, capital expenditure costs, including
drilling, completion and facilities costs, unexpected decline rates in wells,
delays in projects and/or operations resulting from surface conditions, wells
not performing as expected, delays resulting from or inability to obtain
required regulatory approvals and ability to access sufficient capital from
internal and external sources. As a consequence, actual results may differ
materially from those anticipated in the forward-looking statements. Readers
are cautioned that the forgoing list of factors is not exhaustive. Additional
information on these and other factors that could effect Highpine's operations
and financial results are included in reports on file with Canadian securities
regulatory authorities and may be accessed through the SEDAR website
(www.sedar.com) and at Highpine's website (www.highpineog.com). Furthermore,
the forward-looking statements contained in this news release are made as at
the date of this news release and Highpine does not undertake any obligation
to update publicly or to revise any of the forward-looking statements, whether
as a result of new information, future events or otherwise, except as may be
required by applicable securities laws.
Boes may be misleading, particularly if used in isolation. A boe
conversion ratio of six mcf to one 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
information contained herein.
For further information:
For further information: Jonathan A. Lexier, President and Chief
Executive Officer, Tel: (403) 508-9550, firstname.lastname@example.org; Chuck Buckley,
Senior Vice President, Exploration, Tel: (403) 508-9535,
email@example.com; Fax: (403) 508-9503, Website: www.highpineog.com