CALGARY, Jan. 9 /CNW/ - Highpine Oil & Gas Limited (TSX: HPX)
("Highpine") is pleased to provide an operational update and 2008 outlook.
Year-End Production Update
Highpine estimates that its December 2007 field production averaged
19,400 Boe/d, up 34% from December 2006 (14,500 Boe/d). December 2007
production was composed of 13,300 barrels oil and NGL's per day, and
36.6 million cubic feet of natural gas per day. Estimated fourth quarter
production volumes were 19,500 Boe/d. Estimated average production for 2007
was 17,600 Boe/d, an increase of nearly 50% over the previous year.
In December, Highpine continued to experience production curtailments due
to operational issues at some of its recipient gas plants. Highpine is taking
steps to improve all of its recipient gas plant operations for 2008 including
installing an additional booster compressor on one of its major sales lines
from the Violet Grove 16-29 battery to increase throughput capacity of sour
natural gas. In addition, during the first half of 2008, Highpine plans to
debottleneck the 16-29 oil facility to substantially increase the facility's
Five Nisku wells at Pembina are awaiting tie-in and are expected on
production during the first quarter of 2008. The second of two Cretaceous
wells drilled at Ansell in Q1 2007 came on stream in November at a restricted
rate of 2 MMcf/day (1 MMcf/day net).
Highpine cased 8 (7.27 net) wells during the fourth quarter of 2007 and
currently has one (1 net) Nisku well and two (1 net) Cretaceous wells
drilling. Four (3.33 net) wells are cased as potential gas wells, and 4
(3.94 net) wells have been or will be completed for oil. No dry holes were
drilled in the fourth quarter.
The 94% owned 16-36-48-8W5M (4,200 metre) long reach well drilled into
the Pembina Nisku WW pool has been completed. The 16-36 well encountered the
WW pool porous Nisku reef 177 feet above the pool oil/water contact and
60 feet higher than the 9-35 well. As expected, the 16-36 well shows no
indications of a gas/oil or oil/water interface. The 16-36 well commenced
production on December 21st and was shut-in at year end, awaiting regulatory
approval of a production allowable. The 16-36 well is analogous to the
offsetting 9-35-48-8W5M well which has been on production at rates up to
2,200 barrels of oil per day plus three million cubic feet of gas per day.
A new 100% owned Pembina Nisku oil pool was discovered in October 2007.
This well tested clean oil and natural gas and is currently being tied in for
a better evaluation of capability and pool size.
Two 100% Highpine owned Pembina wells were cased as potential oil wells
in December. The 11-11-48-10W5M will be completed in January for production
from the Pembina Nisku DDD pool. The 9-26-48-8W5M well encountered porous
Nisku reef with hydrocarbons indicated on logs and will be completed as a
Nisku oil well in January.
One (0.83 net) Nisku gas well has been completed and is expected to be
on-stream in January 2008. Two (1.5 net) of the potential Nisku gas wells are
awaiting completion. The previously announced Cretaceous gas well at Joffre
has been producing since October 29, 2007 at 500 Mcf/d.
Q1 2008 Drilling Plans and 2008 Budget
During the first quarter of 2008, Highpine plans to complete a 4
(3 operated) Nisku well drilling program at Pembina and participate in a 3
(1.5 net) well drilling program at Ansell, Alberta, targeting Cretaceous
In light of the uncertainty surrounding the New Royalty Framework
("NRF"), the Board of Directors has approved an interim capital budget for
2008 of $150 million, being an amount which is below anticipated cash flow.
This budget will allow for Highpine's participation in 34 (28 net) wells in
2008. The interim budget will permit Highpine to reduce its debt pending a
potential expansion of capital activities if clarification in the NRF can be
obtained which removes the uncertainty surrounding deep oil drilling in
Alberta. Highpine remains committed to working with the Government of Alberta
to address unintended consequences from the NRF and to providing value to its
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 class A
common shares trade on the Toronto Stock Exchange under the symbol "HPX".
Barrels of oil equivalent ("BOE") may be misleading, particularly if used
in isolation. A BOE conversion ratio has been calculated using a conversion
rate of six thousand cubic feet of natural gas to one barrel and is based on
an energy equivalency conversion method application at the burner tip and does
not represent an economic value equivalency at the wellhead.
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, plans for and results of
exploration and development activities and other operational developments, and
expenditures pursuant to the capital budget program and the results therefrom.
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 NRF 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.
The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
For further information:
For further information: A. Gordon Stollery, President and Chief
Executive Officer; Bob Rosine, Executive Vice President, Corporate
Development; Harry D. Cupric, Vice President, Finance and Chief Financial
Officer; Telephone: (403) 265-3333, Facsimile: (403) 265-3362, Website:
www.highpineog.com; Media Contact: Shauna MacDonald, (403) 538-5645