CALGARY, April 24, 2014 /CNW/ - Cequence Energy Ltd. ("Cequence" or the "Company") (TSX: CQE) is pleased to report that estimated daily production volumes have reached a record of 14,000 boepd during the second half of April following the startup of the Ansell facility and completion of its winter capital program.
At Simonette, the final two wells of the Company's Montney winter drilling program were completed and are producing with much higher liquid yields than average wells of the Company in this area. Of particular note, management believes the 13-35-61-27W5 Montney well is an important step-out on the northwest flank of the field. The 2,289 meter lateral well was completed with a 26 stage frac. After 10 days of testing and production, the 13-35 well is currently producing 1,540 boepd comprised of 6.3 mmcfd of natural gas and 345 barrels per day of free condensate.
The Company's 16-10-61-1W6 Montney well is located in the southwest corner of the field and was drilled with a shorter than average lateral length of 1,860 meters and was completed with a 21 stage slick water frac. After 18 days of testing and production, the 16-10 well has stabilized at a rate of 370 boepd including 1.2 mmcfd of natural gas and 138 barrels per day of free condensate. Management believes the 16-10 well extends a Montney oil trend south from the 15-12 well drilled in 2011. Cequence is evaluating these results and the opportunity to improve potential recoveries with optimized completion techniques. The 16-10 well is currently tied-in to a third party gathering system and is producing into the Keyera Simonette plant for test purposes prior to a tie-in to the Cequence gathering system.
Cequence previously announced the results of a Montney well drilled at 14-24 (was 10-24) on January 21, 2014. The well is outperforming the model rate and has now produced for 92 days with an IP90 of 1,275 boepd comprised of 6.2 mmcfd of natural gas and 86 bbls/d of condensate. Management believes that the 14-24 well has successfully delineated an undrilled portion of the field.
Cequence also previously announced results from a Dunvegan well drilled at 5-2-61-02W6. Cequence has a 65% WI in the 5-2 well which has now produced for 93 days with an IP90 of 1,811 boepd comprised of 8 mmcfd of natural gas, and 147 bbls/d of free condensate (all production volumes are gross). Additional Dunvegan locations are planned for the second half of 2014 as model wells in this area would achieve payout in 6 months at current prices.
Based on field estimates, Q1 2014 production increased by approximately 10% from Q4 2013 to approximately 11,500 boepd despite production delays resulting from mechanical completion problems on two wells completed in January. Remedial operations from these two wells are currently planned for Q3 2014.
The results of Cequence's winter program has confirmed management's expectations over most of the existing field and has confirmed a broad area with higher liquids yield on the west side of the field. Cequence is now ready to enter the development drilling phase in the Montney at Simonette and will be moving to a multi-well pad drilling program starting this summer. Other operators have seen significant cost savings as they have transitioned to pad drilling and Cequence is expecting to realize similar savings. Cequence has invested significant capital in its 100% owned strategic infrastructure which can be easily expanded to accommodate future volumes from multi-well pad locations.
At Ansell, the gathering system and compression facility located at 12-31 was completed in early April and the startup of new wells drilled in Q1 commenced shortly afterward. In the last few days, Ansell production has reached 25 mmcfd (12.3 mmcfd net to Cequence) as six of the seven wells drilled to date are now on production. Cequence owns a 49% interest in the facilities and production. Cequence's partner in the area has two remaining farm-in wells to drill to earn an interest in the balance of Cequence's 100% lands in the area.
Cequence expects its partner at Ansell to propose an active drilling program in the second half of 2014 to continue to delineate this exciting new discovery and to begin a development drilling program.
Cequence announces that Howard Crone, Executive VP and COO of Cequence will be retiring from his role as an officer of the Company in 2014, but will remain on the Company's board of directors. Mr. Crone has played a very important role in the success of Cequence and remains a large shareholder. The Board thanks Howard for his efforts and is very pleased that he will continue as a director of the Company. An executive search has been commenced to find a replacement to fill the COO role.
Cequence is a publicly traded Canadian energy company involved in the acquisition, exploitation, exploration, development and production of natural gas and crude oil in western Canada. Further information about Cequence may be found in its continuous disclosure documents filed with Canadian securities regulators at www.sedar.com.
Forward looking Statements or Information
Certain statements included in this press release constitute forward-looking statements or forward-looking information under applicable securities legislation. Such forward-looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this press release may include, but are not limited to, statements or information with respect to its guidance and forecasts: business strategy and objectives; development, exploration, acquisition and disposition plans, including the anticipated benefits resulting therefrom and the timing thereof; potential delineation of fields; future production levels and potential payout timelines; drillings plans; and anticipated cost savings. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, however, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding, among other things: the impact of increasing competition; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements or information. These risks and uncertainties may cause actual results to differ materially from the forward-looking statements or information. The material risk factors affecting the Company and its business are contained in the Company's Annual Information Form which is available on SEDAR at www.sedar.com.
The forward-looking statements or information contained in this press release are made as of the date hereof and the Company 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 required by applicable securities laws. The forward looking statements or information contained in this press release are expressly qualified by this cautionary statement.
BOEs are presented on the basis of one BOE for six Mcf of natural gas. Disclosure provided herein in respect of BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
For fiscal 2013, the ratio between the average price of West Texas Intermediate ("WTI") crude oil at Cushing and NYMEX natural gas was approximately 26:1 ("Value Ratio"). The Value Ratio is obtained using the 2013 WTI average price of $98.01 (US$/Bbl) for crude oil and the 2013 NYMEX average price of $3.73 (US$/MMbtu) for natural gas. This Value Ratio is significantly different from the energy equivalency ratio of 6:1 and using a 6:1 ratio would be misleading as an indication of value.
The TSX has neither approved nor disapproved the contents of this news release.
SOURCE: Cequence Energy Ltd.
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