CALGARY, Oct. 19 /CNW/ - Result Energy Inc. ('Result'; TSX-V: RTE) reports that it has closed the previously announced disposition of its Horn River shale gas assets in northeastern British Columbia to a major energy trust for $11 million cash, plus certain non-cash consideration. The cash proceeds from the sale are being used to extinguish all of the Company's bank operating loan and current payables.
Given the recent and projected weakness in natural gas markets, the Company will focus its 2010 capital program on low risk conventional tight oil projects in Alberta and Saskatchewan. Result plans to participate in projects which offer year-round access and drilling depths less than 2,000 meters (vertical). The Company will also focus on geologic formations which have large oil-in-place volumes plus low primary recovery factors and which will benefit from the recent advances in multi-frac horizontal well technology. Result is currently active in four project areas which meet these criteria:
Garrington - Pembina
As part of the non-cash consideration of the Horn River transaction, Result has entered into a 5.5-section farmin agreement in the Garrington area of west central Alberta. These lands are considered highly prospective for Cardium tight oil. Upon completion of the earning terms, Result will earn 50 percent working interest before payout (30 percent after payout) across the subject lands. Assuming success, the Company plans to drill additional appraisal and development wells in Q4/2010 and into Q1/2011.
The Garrington farmin is situated just south of the Company's existing properties at Pembina-Modeste, where Result holds interests in eleven sections. Over the past several years, the Company has developed these lands for Viking gas potential, and recognizes that they are also very prospective in the Cardium zone. Result's Modeste acreage, in particular, is situated approximately three miles west of recent Cardium activity. The Company believes that its acreage lies within the same geologic fairway. Result plans to drill at least two (1 net) Cardium horizontal wells and one (0.4 net) Viking horizontal target at Pembina-Modeste during 2010.
Result is involved in a Cardium tight oil project at Kakwa, Alberta. The Company holds interests in 6 sections, which are prospective for a mix of Cardium oil and deep basin gas. Both targets are expected to benefit from multi-frac horizontal drilling.
Result continues to pursue its Bakken tight oil play at Tatagwa in southeast Saskatchewan. Earlier this year, the Company drilled and cased one horizontal well under the terms of a seven section farmin agreement with a major royalty trust. This well is scheduled for completion and testing during Q4/2009. A second horizontal (0.5 net) Bakken test is also scheduled for drilling during Q4/2009. Over the past several years, the Bakken play has received considerable industry attention, as initial production rates from multi-frac horizontal wells have exceeded 200 barrels per day. The Saskatchewan Bakken fairway covers a large geographic area and Result is hopeful that its two current farmin wells will prove up a new extension to this prolific play.
Peace River Arch
Also in 2010, Result plans to drill at least two (0.9 net) wells at Sweeney and Eureka to exploit several light oil projects in its traditional core area in the north Peace River Arch. At Sweeney, the Company holds interests in four sections which are prospective for Jurassic/Triassic oil potential. The project operator has recently reported favorable initial flow rates from several wells drilled on its proprietary acreage, which is immediately adjacent to Result-interest lands. At Eureka, the Company holds interests in seven sections which are prospective for Charlie Lake and Montney oil. Result has previously enjoyed success on these play types at Clearhills.
In commenting on this suite of projects and the Company's new direction, Bill Matheson, President & CEO, said: "This inventory offers an excellent base from which to launch our 2010 corporate focus on conventional tight oil plays. For most of these projects, the application of multi-frac horizontal well technology, plus the corresponding recovery and production enhancement, has already been proven by other area operators. Result has managed to aggregate a strong land position in or near the heart of these plays".
Result's current production is approximately 550 boed, 95% weighted towards natural gas. The Company has hedged approximately 200 boed at $5.36 per GJ for 12 months commencing November 1, 2009. On a risked basis, the Company's 2010 drilling program is expected to add 250-300 bod of additional oil production. Accordingly, the Company projects that its 2010 exit volumes will approach 800 boed, weighted at least 40% to light oil.
Result Energy Inc. is a publicly traded Canadian energy company involved in the exploration and development of oil and gas properties in western Canada. Result trades on the TSX Venture Exchange under the symbol "RTE".
Investors are cautioned that this news release contains forward looking information. Such information is subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information, as no assurances can be given as to future results, levels of activity or achievements. In addition, Result has applied the industry standard of converting natural gas volumes at six thousand cubic feet per barrel (6 mcf/bbl) of natural gas to barrels of oil equivalence ("boe"). Boe units may be misleading, particularly if used in isolation.
Neither 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 release.
SOURCE RESULT ENERGY INC.
For further information: For further information: William Matheson, President & CEO, Result Energy Inc., (403) 777-0007