Provides Operations Update on Summer Drilling
CALGARY, Sept. 10 /CNW/ - (TSX - PXE) - ProEx Energy Ltd. ("ProEx" or the
"Company") today increased its 2008 capital investment program by
approximately 15 percent to between $180 and $190 million. The increase is a
result of the on-going success in the Company's stated 2008 growth catalysts
and will allow the Company to maintain its accelerated pace of drilling
activity through year-end.
ProEx has five drilling rigs and three service rigs operating in the
field at present. The Company anticipates keeping these rigs running
constantly through to the end of the winter drilling season. Since the start
of the third quarter, a total of 16 wells (12.6 net) have been successfully
drilled and tested. Wet weather has not impeded the rate of drilling activity
but has slowed completion and tie-in activities. At present, three net wells
have been tied-in while the balance of the wells are expected to be brought
into the Company's gathering system prior to quarter end.
ProEx had previously identified various 2008 growth catalysts that, with
success, could lead to an accelerated pace of activity and higher capital
investment. The Company sought to continue the success of its Mississippian
Debolt program in the Caribou area to the southern regions of its Foothills
land base. To date in the quarter, two 3-D defined Mississippian tests have
been drilled and will be tested over the upcoming months. An additional three
Mississippian tests will be drilled before year-end.
The Halfway formation is the Company's primary growth driver in the
Foothills of northeast British Columbia. Advances in horizontal drilling and
completions technologies have created the opportunity to investigate full
scale development and delineation of previously discovered Halfway pools. This
will include the drilling of both mid and lower grade reservoirs positioned on
the crests and flanks of known anticlines as well as accessing reservoirs in
areas where surface topography is not conducive to conventional operations.
To date, ProEx, along with its working interest partner, has completed
its first multi-stage fracture stimulation on an existing horizontal well at
Bubbles (40 percent WI) and has drilled, and is currently completing, its
first grass roots horizontal well at Dogrib (80 percent WI).
The well completed at Bubbles was originally drilled in 1999 and flowed
minimal gas on test from the Halfway, is now flowing at 2.2 million cubic feet
per day at high flowing pressures since being tied-in two weeks ago. The
approximate 750 meter horizontal portion was completed with six separate
fracture stimulations, tested and then tied-in to production facilities.
More recently, in the Dogrib Halfway pool, a 1000 meter horizontal well
was successfully drilled on budget and is currently being prepared for a
multi-stage completion. The Company's next horizontal well is drilling in the
Caribou area into better quality Halfway sands. An additional three (2.4 net)
Halfway horizontal wells will be drilled prior to year-end and will utilize
multiple-lateral fracture techniques. ProEx will continue to evaluate the
application of this technology over many of its known Halfway pools including;
Sasquatch, Gundy, Bubbles and Town.
At Julienne, the Company's Cretaceous program continues to achieve strong
success with six wells drilled to date in the third quarter. The drilling
program successfully extended the Gething Pool to the north in the Julienne
area while also contributing a new pool discovery at Julienne North. A further
eight wells are currently planned to the end of the year at Julienne following
up on these successes.
Undeveloped Land Growth and Large Seismic Program Planned
Additions to the Company's undeveloped lands in the third quarter total
approximately 24,000 net undeveloped acres. In 2008, over 88,000 undeveloped
acres have been added to lands under ProEx's control which now total over
518,000 net undeveloped acres. The Company's land acquisition program will
continue for the remainder of 2008 as ProEx targeting expansion of its natural
gas opportunities in the B.C. Foothills.
ProEx has permitted approximately 425 square kilometers of land for
seismic data acquisition. Several of these programs are anticipated to be shot
during the first quarter of 2009. The Company has used 3-D seismic extensively
to define sub-thrust features in the Mississippian and Triassic sections. In
total, the Company currently has over 2,200 square kilometers of 3-D seismic
data in the Foothills.
In addition to the tie-in of the above noted wells, the Company recently
commenced construction of a new compression and sales facilities at Beg which
will add an incremental six million cubic feet ("mmcf") per day of processing
capacity at Beg. In total, ProEx has 10 plants providing in excess of 120 mmcf
per day of processing capacity in the Foothills.
The expansion of the third-party owned Caribou facility in the northern
portion of the Foothills is progressing on schedule for completion by the end
of the first quarter of 2009.
The Company is again partnering with the province of British Columbia on
infrastructure development. ProEx has been approved for the construction of a
gathering pipeline system in the Caribou area. This project is expected to be
completed during the fourth quarter.
Production for the third quarter of 2008 is expected to average
approximately 11,300 to 11,400 boe per day compared to 8,677 boe per day in
the third quarter of 2007 and 10,449 boe per day in the second quarter of
2008. Third quarter production is lower than originally anticipated by the
Company due to wet field conditions, which has delayed completions and tie-in
activities, and unscheduled plant and gathering system downtime at third-party
facilities. Exit rate production, supported by existing wells in the process
of being tied-in and an active second half drilling program, remains unchanged
and is expected to be in the range of 14,000 to 15,000 boe per day. ProEx has
pre-invested in several processing facilities and pipeline arteries in its
operating areas during 2008 and is now positioned to bring newly discovered
natural gas to market on a timely basis.
2008 Capital Investment Program
The Company's 2008 capital investment program is being increased from the
previous $150 to $160 million range to between $180 to $190 million based on
the success of the drilling program to date and to position the Company for
first quarter 2009 activity. A total of 50 to 55 net wells will be drilled
during 2008. The Company has approved bank lines totalling $225 million and is
well positioned to finance its 2008 program internally.
ProEx employs an active risk management program to provide certainty to a
portion of its cash flow supporting its capital investment program. The
Company has hedged 40,000 gigajoules ("GJ") per day (approximately 35 mmcf per
day), or approximately 50 percent of its before royalty forecasted natural gas
production, for the period from April 1, 2008 through to October 31, 2008, at
an average net floor price of C$7.90 per mcf based on the Company's high heat
content natural gas production. The summer hedging program was completed using
a series of swaps and bull spread structures. The swap and bull spread
structure that ProEx utilizes sets a relatively high floor in the current
market and allows participation up to an equivalent average summer 2008 net
gas price of C$9.00 per mcf. The Company has also hedged 15,000 GJ's per day
of it natural gas volumes for the period November 1, 2008 to March 31, 2009
resulting in a net floor of $11.18 per mcf and a ceiling of $14.64 per mcf.
Peters & Co. Limited 2008 North American Oil and Gas Conference
Mr. David Johnson, President and Chief Executive Officer of ProEx, will
present at 3:15 p.m. eastern time, (1:15 p.m. Calgary time), on Wednesday,
September 10, 2008. Interested investors may access a copy of the presentation
slides at ProEx's website at www.proexenergy.com and access the audio webcast
ProEx Energy Ltd. is a Calgary Alberta based junior oil and natural gas
company with operations in northeast British Columbia. Common shares of ProEx
are listed on the Toronto Stock Exchange under the symbol PXE.
Forward Looking Statements - Certain information regarding ProEx Energy
Ltd. set forth in this document, including management's assessment of ProEx
Energy Ltd.'s future plans and operations, contains forward-looking statements
that involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
certain of which are beyond ProEx Energy Ltd.'s control, including the impact
of general economic conditions, industry conditions, volatility of commodity
prices, currency fluctuations, imprecision of reserve estimates, environmental
risks, competition from other producers, the lack of availability of qualified
personnel or management, stock market volatility and ability to access
sufficient capital from internal and external sources. ProEx Energy Ltd.'s
actual results, performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do
so, what benefits that ProEx Energy Ltd. will derive therefrom.
For further information:
For further information: Mr. David Johnson, President & CEO, Mr. Steven
Allaire, Vice President Finance & CFO, ProEx Energy Ltd., 1200, 205 - 5th
Avenue S.W., Calgary, Alberta, T2P 2V7, Phone: (403) 216-2510, Fax: (403)
216-2514, Email: firstname.lastname@example.org, Website: www.proexenergy.com