CALGARY, April 8, 2014 /CNW/ - Surge Energy Inc. ("Surge" or the
"Company") (SGY: TSX) announced today that, based upon better than
anticipated first quarter 2014 development drilling results, a large
new crude oil discovery in SW Saskatchewan, and excellent results from
several of the Company's ongoing waterflood projects, Surge has already
exceeded the Company's 2014 year end production exit rate.
Accordingly, Surge is now revising upward the Company's 2014 year end
production estimate from 16,550 boepd to 16,850 boepd (85 percent oil
On this basis, proforma the previously announced acquisition of Longview
Oil Corp. ("Longview"), Surge is now projecting an increased 2014
production exit rate of 21,350 boepd (84 percent oil and NGLs).
Exciting First Quarter 2014 Drilling Results; Large New Oil Pool
In the first quarter of 2014, Surge experienced better than anticipated
development drilling results across the Company's entire asset base.
During the quarter Surge drilled a total of 18 wells (13.3 net), with a
success rate of 100 percent.
At Shaunavon in SW Saskatchewan, Surge drilled an exciting new pool
discovery in the Upper Shaunavon horizon (100% WI) at 16-36-5-20-W3.
The horizontal well encountered 1,175 meters of reservoir section and
was completed with 21 frac stages. This discovery well is currently
producing over 300 bopd. The success of this well confirms Surge's 3-D
seismic interpretation of the Upper Shaunavon interval over its lands.
Surge now maps over 125 million barrels of OOIP1 in the Upper Shaunavon formation, with the potential for more than 64
additional locations (4 wells per section).
Surge also successfully drilled four (3 net) Lower Shaunavon wells in SW
Saskatchewan during the first quarter of 2014 with excellent type curve
results. In addition, Surge has observed significant re-pressuring of
the Lower Shaunavon formation on both of the Company's four and eight
well per section waterflood pilots, as a result of the injection
commenced in the fourth quarter of 2013. Production from wells that had
been shut in (in order to re-pressure the reservoir) was re-started at
the end of March, 2014. Surge maps over 220 million barrels of OOIP in
the Lower Shaunavon formation, with a 1.96% recovery factor to date.
Surge has over 215 net Lower Shaunavon drilling locations in SW
Saskatchewan, and full waterflood upside.
At Nipisi in NW Alberta, Surge drilled one successful (100% WI) Slave
Point horizontal, multi-frac development well, immediately off-setting
a horizontal injection well. This exciting new well encountered near
virgin reservoir pressure, and is producing over 300 bopd. A third
horizontal injector was added to the pool during the first quarter of
2014. The net waterflood response to date from the three existing
horizontal injectors is estimated currently to be approximately 230
bopd. The capital invested to establish this waterflood was $3.75
million, providing a production efficiency of $13,250 per bopd. This
high netback 80 million barrel OOIP light oil pool has a recovery
factor of less than one percent, with numerous follow-up locations, and
further waterflood upside. Surge anticipates converting two more
horizontal wells to injection at Nipisi over the remainder of 2014.
At Eyehill in Central Alberta, during the first quarter of 2014 Surge
successfully drilled two (2 net) wells into the Sparky formation. The
wells are producing well above the expected 180 day type curve rate. As
a result of successful farm-ins, Surge now estimates over 90 million
barrels of net OOIP in the Sparky formation, with less than one percent
recovered to date. Surge will be converting a horizontal well to
injection in the second quarter of 2014.
A successful offsetting 200 meter development well indicates that this
level of pool development will likely be required to fully develop and
waterflood this high quality Sparky oil pool. The Company has over 47
(45 net) development locations at Eyehill based on 400 meter inter-well
spacing, however, with full development and waterflood, this well count
could double. In the last year at Eyehill, Surge has organically grown
production to over 900 boepd.
At Provost, Surge drilled one (1 net) horizontal, multi-frac, Sparky
well. The well was brought on production late in the first quarter of
2014, and is producing at expected 180 day type curve rates. The
battery facilities will be expanded at Provost on this 45 million
barrel OOIP pool to accommodate the conversion of a well to injection,
which is planned for the second quarter of 2014. Surge has over 18 net
development locations remaining at Provost.
At Macoun in SE Saskatchewan, Surge drilled two (2 net) horizontal,
multi frac, Midale wells. The wells are producing significantly above
the expected 180 day initial rate. Since acquiring this elite Midale
Marly pool in the fourth quarter of 2013, Surge has now increased net
oil production to over 900 boepd, from approximately 550 boepd at the
time of purchase. This has been accomplished through successful
development drilling, a pump optimization program, and the fracing of
an existing, non- stimulated, horizontal well.
At Manson in SW Manitoba, during the first quarter of 2014 Surge focused
on an expansion of the waterflood through the conversion of two (2 net)
horizontal, Bakken wells to injection. The gathering and water
injection pipeline system was expanded to accommodate the single well
battery development locations that were drilled in 2013. Waterflood
approval was received for two additional sections of this elite, high
netback 76 million barrels OOIP light oil pool. Accordingly, Surge will
continue to expand the waterflood in these sections with the conversion
of two wells to injection in the third quarter. Surge plans to drill
two (1 net) wells at Manson over the balance of 2014. During the first
quarter of 2014 Surge also participated with a joint venture operator
in the drilling of two (1 net) Bakken development wells. These wells
were bought on production at the end of the quarter. Surge has over 33
net development locations remaining at Manson.
At Valhalla in NW Alberta, Surge drilled an exciting farm-in,
horizontal, multi-frac Doig well in section 13-75-9W6 (0.875 net). This
step-out well came on production March 26, and is currently producing
significantly above type curve expectations. Surge now expects the well
to be very similar in production potential to the prolific wells
drilled by Surge in 2013 to the south in sections 12-75-9W6 and
7-75-8W6. Surge has over 36 net development locations remaining at
In the Viking area of Southwest Saskatchewan, Surge successfully drilled
2 (2 net) Viking development wells. In addition, an experienced local
operator farmed-in on Surge's more exploratory acreage and drilled two
(0.4 net) Viking earning, horizontal wells. The wells were placed on
production at the end of March. Surge has over 100 net development
locations remaining in the Viking area.
Upward Revision to 2014 Exit Rate
Based upon the excellent development drilling results discussed above,
the large new crude oil pool discovery in the Upper Shaunavon formation
in SW Saskatchewan, and the excellent results from several of Surge's
ongoing waterflood projects, Surge has already exceeded the Company's
projected 2014 production exit rate target of 16,550 boepd (85 percent
oil and NGLs).
Accordingly, Surge is now revising upward the Company's 2014 exit rate
to more than 16,850 (85 percent oil and NGLs).
On this basis, proforma the previously announced acquisition of
Longview, Surge is now projecting an increased 2014 production exit
rate of 21,350 boepd (84 percent oil).
Surge management will provide new updated guidance following the closing
of the Longview acquisition in early June 2014.
FORWARD LOOKING STATEMENTS:
This press release contains forward-looking statements. More
particularly, it contains forward-looking statements concerning: (i)
estimated 2014 exit rates of production, (ii) ultimate recovery factors
at certain of Surge's properties, (iii) planned drilling, development
and waterflood activities, (iv) the potential number of drilling
locations at certain of Surge's properties, and (v) the anticipated
production profile of certain of Surge's wells.
The forward-looking statements contained in this press release are based
on certain key expectations and assumptions made by Surge, including
expectations and assumptions concerning the success of future drilling,
development and completion activities, the performance of existing
wells, the performance of new wells, the viability of waterflood
projects, the availability and performance of facilities and pipelines,
the geological characteristics of Surge's properties, the successful
application of drilling, completion and seismic technology, prevailing
weather conditions, commodity prices, royalty regimes and exchange
rates, the application of regulatory and licensing requirements and the
availability of capital, labour and services.
Although Surge believes that the expectations and assumptions on which
the forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because Surge
can give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by
their very nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated due to
a number of factors and risks. These include, but are not limited to,
risks associated with the oil and gas industry in general (e.g.,
operational risks in development, exploration and production; delays or
changes in plans with respect to exploration or development projects or
capital expenditures; the uncertainty of reserve estimates; the
uncertainty of estimates and projections relating to production, costs
and expenses, and health, safety and environmental risks), commodity
price and exchange rate fluctuations and uncertainties resulting from
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures. Certain of these risks
are set out in more detail in Surge's Annual Information Form which has
been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made
as of the date hereof and Surge undertakes no obligation to update
publicly or revise any forward-looking statements or information,
whether as a result of new information, future events or otherwise,
unless so required by applicable securities laws.
Note: Boe means barrel of oil equivalent on the basis of 1 boe to 6,000
cubic feet of natural gas. Boe may be misleading, particularly if used
in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of
natural gas is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. Boe/d means barrel of oil equivalent per
In this press release: (i) mcf means thousand cubic feet; (ii) mcf/d
means thousand cubic feet per day (iii) mmcf means million cubic feet;
(iv) mmcf/d means million cubic feet per day; (v) bbls means barrels;
(vi) mbbls means thousand barrels; (vii) mmbbls means million barrels;
(viii) bbls/d means barrels per day; (ix) bcf means billion cubic feet;
* mboe means thousand barrels of oil equivalent; and (xi) mmboe means
million barrels of oil equivalent
Neither the TSX nor its Regulation Services Provider (as that term is
defined in the policies of the TSX) accepts responsibility for the
adequacy or accuracy of this release.
1 Original Oil in Place (OOIP) is the equivalent to Total Petroleum
Initially In Place (TPIIP) for the purposes of this press release.
TPIIP is defined as that quantity of petroleum that is estimated to
exist originally in naturally occurring accumulations. It includes that
quantity of petroleum that is estimated, as of a given date, to be
contained in known accumulations, prior to production, plus those
estimated quantities in accumulations yet to be discovered. There is no
certainty that any portion of the undiscovered resources will be
discovered. There is no certainty that it will be commercially viable
to produce any portion of the resources. A recovery project cannot be
defined for this volume of TPIIP at this time, and as such it cannot be
SOURCE: Surge Energy Inc.
For further information:
Paul Colborne, President & CEO
Surge Energy Inc.
Phone: (403) 930-1507
Fax: (403) 930-1011
Max Lof, CFO
Surge Energy Inc.
Phone: (403) 930-1021
Fax: (403) 930-1011