CALGARY, Jan. 30 /CNW/ - WIN Energy Corporation ("WIN" or the
"Corporation") is pleased to provide an operational update.
On July 19, 2006 WIN commenced trading on the TSX Venture Exchange
through the completion of its initial public offering, followed by a secondary
offering of flow-through common shares on November 7, 2006.
Completion of Gas Plant and Gathering System
During the first half of 2006, WIN focused its efforts on the completion
of its 100% owned and operated sweet gas plant and 35 kilometre gathering
system in Southwest Alberta, which went on stream on August 18, 2006. This
facility is presently licensed to produce 10,000 Mcf per day of natural gas.
The facility is modular in design and can be expanded as required to
accommodate additional production.
Due to the fact that WIN operates in an environmentally sensitive area,
there are regulations in place that discourage or prevent gas plant
proliferation within a large radius surrounding WIN's core area. The closest
comparable facility is more than 35 kilometres from the WIN gas plant.
Therefore, any third parties operating within proximity to the WIN gas plant
will be charged by WIN for third-party processing and transportation in order
to market their natural gas and natural gas liquids. WIN is currently
finalizing negotiations with a third party to tie-in gas from an additional
high rate well in South Cowley. This production is expected to be tied into
the WIN gas plant prior to the end of the first quarter of 2007.
WIN's 2006 exploration program continued to focus on the evaluation of
the resource potential of its core assets in Southwest Alberta. As an
exploration company, WIN pursues a high risk/high reward philosophy by
building a large contiguous land position and by retaining large working
interests in the wells in which it participates. The 2006 exploration program
consisted of drilling six wells (5.25 net wells) and the re-entry of one well
(0.4 net well). Of these seven wells (5.65 net wells), three wells are
currently behind pipe awaiting tie-in (2.4 net wells), two wells (1.25 net
wells) are currently undergoing testing operations and two wells (2.0 net
wells) have been determined to be dry holes. The two dry holes encountered
potential reservoirs, but the reservoirs have been evaluated as uneconomical
for commercial production. These unsuccessful wells have provided WIN with
valuable exploration information that will help better redefine future
exploration drilling targets in this area.
Over the past four months, WIN has been experiencing delays in testing
its deep exploration well (0.5 net) due to persistent mechanical and weather
related problems. The testing operations on this "tight hole" well will not
commence until after the mechanical problems have been resolved.
During the fourth quarter of 2006, substantially all of WIN's production
came from South Cowley and averaged approximately 430 BOE per day (93% natural
gas and 7% natural gas liquids) from four producing wells (3.5 net wells) with
a 2006 exit rate of approximately 340 BOE per day. The steep production
decline in these wells during their early months is not unusual for natural
gas wells producing from tight reservoirs, such as these. Production from
these wells is now stabilizing.
There are currently five gross wells (4.4 net wells) with gas behind pipe
awaiting tie-in, which management estimates will initially contribute
approximately an additional 300 BOE per day. These wells are planned to be
tied into WIN's gathering system at various times throughout 2007 depending on
distance to the plant and land access.
During 2006, WIN formed a joint venture with a multi-national oil and gas
corporation, pursuant to which the parties have pooled a total of 18.24
sections of petroleum and natural gas rights in North Cowley. The parties also
agreed on a joint venture area that includes 80 square miles and to share
equally all future costs and benefits in connection with the pooled lands and
the joint venture area.
3-D Seismic Program
In December 2006, WIN completed the shooting of a 36 square mile 3-D
seismic survey over its lands in South Cowley. The 3-D seismic survey was
financed by the flow-through financing completed by WIN in November, 2006.
This 3-D seismic was shot over prospects with similar characteristics to other
successful wells in the area. WIN is awaiting completion of the seismic
processing and interpretation before recommencing drilling in this area. This
processing and interpretation is expected to be completed by mid-February,
with drilling on several new 3-D targets to commence shortly thereafter.
Environmental and Community Relations
As part of our community and environmental relations program, Win has
adopted a number of principles and practices that govern how we consult with
our neighbouring stakeholders. This has been the foundation of the excellent
relationships we have in the area where we do business.
WIN is also proud to be a driving force in the re-establishment of the
Oil and Gas Committee of the Southwest Alberta Sustainable Community
Initiative ("SASCI"), an Alberta synergy group. This committee, which helps
WIN and other companies meet regulatory approval, brings together energy
companies operating in Southwest Alberta for the purpose of sharing
information and discussing stakeholder relations, environmental and safety
issues. WIN chairs this committee which is committed to using "best practices"
and an environmentally-responsible approach to all operations on its members'
In November 2006, WIN executed an option agreement for the option to
acquire a 10-year petroleum and natural gas lease covering 93,603 gross acres
(79,009 net acres) of land in Montana. WIN is presently conducting due
diligence to determine whether or not it should exercise the option.
Since its inception, WIN has concentrated on the exploration for, and the
acquisition and development of, natural gas and natural gas liquids in its
core areas of Cowley, Todd Creek, Quaich and Pincher Creek in the Southern
Alberta Foothills. It has developed a large concentrated land position
surrounding its 100% owned and operated gas processing facilities. With these
significant events completed, management is looking forward to its 2007
capital expenditure program, consisting of additional exploration drilling in
order to increase production and expanding our pipeline network and processing
facilities in order to transport and process additional WIN and third party
Note: BOEs may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf: 1bbl 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 TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
This press release contains forward-looking statements, including but not
limited to operational information including drilling projections, production
and processing projections. These projections are based on current
expectations and are subject to a number of risks and uncertainties that could
materially affect the results. These risks include, but are not limited to,
risks associated with the oil and gas industry (e.g. operational risks in
development, exploration and production; delays or changes in plans with
respect to exploration or development projects or capital expenditures; and
the uncertainty of estimates and projections in relation to production, costs
and expenses), drilling equipment availability and the risk of commodity price
and foreign exchange rate fluctuations. Due to the risks, uncertainties and
assumptions inherent in forward-looking statements, prospective investors in
the company's securities should not place undue reliance on these
For further information:
For further information: William J. Kiff, President and Chief Executive
Officer; or Matthew Philipchuk, Vice President Corporate Development, WIN
Energy Corporation, Telephone: (403) 265-7787, Fax: (403) 265-7767