Foothills acquisition and large land sale further consolidate stronghold
CALGARY, Dec. 18 /CNW/ - (TSX - PXE) - ProEx Energy Ltd. ("ProEx" or the
"Company") today provided an operational update on recent drilling and land
acquisition activities and announces a strategic asset purchase which further
consolidates the Company's dominant holdings in the Foothills of northeast
British Columbia ("Foothills").
Strategic Asset Acquisition
ProEx recently closed the purchase of approximately 32,000 net acres of
land and approximately 250 boe per day of production in the Blair and Cameron
areas of the Foothills from an area competitor. ProEx acquired 40 percent
working interest in the acquired lands and its partner Progress Energy Trust
acquired a 10 percent working interest. These lands adjoin ProEx's existing
land base to the west and south of the Company's Town and Gundy properties.
Natural gas production from the existing wells is sourced primarily from the
Cretaceous Bluesky and Gething sands. ProEx recognizes significant development
and exploratory upside on these lands from recently reprocessed 3D seismic
that illustrates several unexploited and undrilled trends. The net cost of the
acquisition was approximately $14 million and includes substantially all of
the conventional rights owned by the vendor. The acquisition will be funded
under the Company's existing credit facility.
Field construction activities are ongoing at an accelerated pace with
eight pipeline projects currently underway at Bubbles, Caribou, West Beg, Town
and Julienne. Current production is in the range of 11,000 boe per day and,
with the above noted activities, is expected to reach between 11,500 and
11,700 boe per day by the end of December based on the tie-in of a portion of
the 2,000 boe per day the Company has behind pipe currently. Production for
the fourth quarter of 2007 is expected to average approximately 9,600 boe per
day compared to 8,677 boe per day in the third quarter of 2007 and 6,080 boe
per day in the fourth quarter of 2006.
To date in the fourth quarter the Company has drilled 28 new tests
(19 net) in the Foothills following up on a very wet summer that muted field
activities. The drilling program included two (1.8 net wells) Mississippian
aged Debolt tests on 3D imaged features. Both wells have now been completed
and are on production through Company controlled infrastructure. Other fourth
quarter drilling has resulted in expanding pool limits at Sasquatch and
Bernadet in the Halfway formation and at Julienne in the Gething zone.
Continued infill drilling at Bubbles and Bubbles North in the Halfway
formation has met expectations. Many of these wells will be tied-in and will
be on production by the end of the year while the balance will come on
production in early January 2008.
Successful exploration wells targeting the Cretaceous sands were drilled
at Diaber, Town South and Cameron Creek. In addition, two exploration wells
targeting the Halfway section were successful in the Green (north
Buckinghorse) project region. These wells together with two other standing
wells are commercial but will require future delineation drilling to define
pool sizes and determine the appropriate infrastructure requirements.
Activity Update for First Quarter 2008
The upcoming first quarter 2008 drilling program will focus on
exploratory tests on other locations identified on 3D seismic acquired earlier
this year as well as drilling earning wells on recent farm-ins within the
Foothills fold belt. The Company will also drill its first horizontal well in
the Foothills region at Julienne. In total, ProEx intends to drill 14 to
18 net wells in the Foothills prior to breakup in 2008 utilizing five to seven
rigs throughout this period.
The Company recently acquired an existing 300 square kilometer 3D seismic
program in the Cameron area in the southern Foothills which covers the newly
acquired properties. In addition, the Company has commenced a new 200 square
kilometer winter seismic recording program in the Caribou/Buckinghorse area
which will be completed in the first quarter of 2008, providing drilling
opportunities for the 2009 and later drilling seasons.
In addition to field construction activities ongoing noted above, the
Company will again partner with the government of British Columbia on two
pipeline projects in the Lily Lake and Blair areas of the western Foothills
which will tie-in stranded gas.
Land Sale Results
ProEx was successful at recent British Columbia land sales having added
approximately 25,000 net acres of contiguous undeveloped land to its portfolio
over the last two months. The lands acquired are in the Buckinghorse area of
the Foothills immediately adjacent to the lands where the Company has been
active since its acquisition in April 2007. The Company's total Foothills
undeveloped land position under its control is now approximately 460,000 acres
compared to 285,000 acres at December 31, 2006.
2008 Capital Investment Program
ProEx Energy has established its 2008 capital investment program of
approximately $150 million. Approximately 65 percent will be directed toward
drilling and includes the drilling of between 55 to 65 net wells. Production
is expected to average between 12,000 and 13,000 boe per day representing an
approximate increase of 40 percent over the 2007 forecast average. Average
production in 2008 includes the scheduled plant turnaround at the Spectra
owned McMahon gas processing facility which will be shut down for a period of
approximately 20 days in June. Exit rate production in 2008 is expected to be
in the range of 14,000 to 15,000 boe per day.
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