TSX Venture Exchange: PRY
CALGARY, Jan. 17, 2013 /CNW/ - Pinecrest Energy Inc. ("Pinecrest" or the "Company") is pleased to announce that its production, based on field estimates, is currently 5,080 boe/d (99% oil and liquids) and is in line with its previous 2012 exit guidance of 5,000 boe/d. In addition, the Company expects that the wells placed on production in December 2012 will continue to show improvement in production rates through January and February 2013 as completion fluids are recovered.
The Company's 2013 Greater Red Earth area development program is well underway and Pinecrest will provide details of its 2013 capital plan and guidance together with a detailed operational overview on February 6, 2013.
In the interim, we are pleased to provide the following update:
The positive results of Pinecrest's joint waterflood provided the Company with sufficient confirmatory data to proceed with several waterflood schemes with the objective of capturing the repeatable upside associated with pressure maintenance. In this regard, and in an effort to accelerate the Company's ability to implement fully developed horizontal well waterflood schemes in 2013, Pinecrest elected to allocate capital towards infill drilling a total of three sections of land (eight horizontal wells per section spacing; 1,400m laterals) by drilling 12 gross (12.0 net) infill horizontal wells in the third and fourth quarters of 2012.
Initial results from the Company's first 100% operated waterflood scheme (Evi - Project #2) have been very encouraging and in accordance with Company expectations. Injection commenced on December 20, 2012, and has been on continuous injection since. After 25 days of injection, all of the offsetting producing wells in the scheme are already showing a positive response, each demonstrating an increase in pressure and current production rates up to two times higher than rates prior to injection.
Pinecrest has received ERCB approval for its second 100% operated waterflood (Loon -Project #1), with injection scheduled for early February 2013, and an initial response expected shortly thereafter. An additional five schemes have been applied for and approvals are anticipated to be obtained within the next four to five weeks after which all of these projects are scheduled to be phased in throughout the second and third quarters of 2013. The locations of the seven waterflood schemes are dispersed throughout the Greater Red Earth area, encompassing the Evi, Otter, Loon and Red Earth fields. All of the proposed waterflood schemes will utilize existing wells and will enjoy similar or lower capital efficiencies as the initial Evi - Project #1 waterflood. The expected budgeted capital for the seven operated waterflood projects is approximately $7 million.
During 2012, Pinecrest drilled a total of 39 gross (37.71 net) operated Slave Point horizontal oil wells in the Greater Red Earth area. Of these, 16 gross (15.25 net), wells were drilled in the fourth quarter and 9 gross (9.0 net) commenced production in December 2012. Three gross (2.5 net) wells were drilled in late 2012 and will be completed and placed on production in January 2013. All of the Company's Slave Point horizontal wells are fracture stimulated using gelled water to place the frac sand (proppant) in the reservoir. As a result, our experience indicates that each individual well's peak oil production rate is not observed until it has been on production for approximately two months.
The 2012 year was extremely busy for Pinecrest. Record activity, record production volumes and the commissioning of our first operated waterflood scheme are all positive indicators looking forward into 2013. As a greater proportion of the Company's production base becomes pressure maintained, material positive change is expected to our overall production decline profile. The combination of the Company's large drilling inventory, industry leading production netback, improving capital efficiencies and attenuated corporate decline rate will drive the growth profile of the Company for the foreseeable future.
The information in this press release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. In particular, forward looking statements in this press release includes, but is not limited to: Pinecrest's capital program and business objectives, Pinecrest's budget, oil recovery rates, the effects of waterfloods on recovery factors, decline rates and type curves for wells, production rates, exit rates for production and bank debt, downspacing opportunities, the quantity of reserves, and projections of market prices and costs. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Pinecrest's control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves. Pinecrest's actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that Pinecrest will derive from them. Except as required by law, Pinecrest undertakes no obligation to publicly update or revise any forward-looking statements.
Statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources or reserves described can be profitably produced in the future.
Barrels of Oil Equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of 6MCF: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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1,utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE: Pinecrest Energy Inc.
For further information:
Pinecrest Energy Inc.
Suite 500, 255 - 5th Avenue S.W.
Calgary, Alberta T2P 3G6
Wade Becker, President and CEO
Dan Toews, V.P. Finance & CFO
Tel: (403) 817-2550 or
Fax: (403) 817-2599