Toronto Stock Exchange: SCS
82,899,295 Common Shares
CALGARY, Dec. 13 /CNW/ - Second Wave Petroleum Inc. ("Second Wave" or the "Company") is providing the following update on its Judy Creek operations.
On December 10th, the Company experienced a fire at its Judy Creek 08-24-063-10W5 gas plant resulting in the plant's gas refrigeration system and the associated building suffering significant damage. While the exact cause of the fire is under review, it appears the fire commenced while third party mechanics were completing routine maintenance on a compressor engine within the refrigeration building. No injuries occurred during this incident and the fire was contained to the single building. Both the third party contractors and Second Wave operations personnel responded quickly to the situation resulting in the fire being isolated. All corporate, regulatory and emergency personnel were appropriately notified in a timely manner.
The extent of the damage to the facility will require the Company to replace the unit, the installation of which is expected to take 15 to 20 days. The Company believes that insurance proceeds will cover substantially all of the associated costs.
Prior to the outage, Judy Creek production had reached a daily net rate of approximately 1,300 boe/d with approximately 1,050 boe/d being produced from the Company's Judy Creek Pekisko oil battery. As solution gas from the Company's Pekisko oil battery is processed exclusively at the damaged 08-24-063-10W5 gas plant, production of approximately 1,050 boe/d was shut in on December 10, 2010 as the Company could no longer meet its hydrocarbon due point requirements on its sales gas stream. The Company's Judy Creek Ellerslie oil battery, which produces approximately 250 boe/d, will remain on line during this outage as the solution gas from this battery is processed at a third party facility.
The Company had completed the tie-in of its 100% working interest 09-13-063-10W5 and 12-14-063-09W5 Pekisko horizontal oil wells on December 5 with both wells still cleaning up prior to the outage. The start up of the Company's 03-14-063-09W5 Gilwood gas well and its 05-14-063-09W5 Pekisko horizontal oil well, both of which tie into the Company's Pekisko oil battery, was scheduled for December 14, 2010. Behind pipe volumes associated with these four wells is estimated at 600 boe/d and as such the temporary outage of the Company's gas plant will result in the shut in of approximately 1,650 boe/d of net production over the repair period.
The Company will provide additional guidance on progress made on repairs to the facility and related start up as timing becomes clearer.
Barrels of Oil Equivalent (BOEs). The term BOE refers to barrel of oil equivalent, with natural gas converted to crude oil equivalent at a ratio of six thousand cubic feet to one barrel. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of six mcf (six thousand cubic feet) to one bbl (one barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Forward-Looking Statements. This news release contains forward-looking statements as to the Company's internal projections, expectations and beliefs relating to future events or circumstances. Forward-looking statements are typically (but not necessarily) identified by words such as "anticipate", "believe", "plan", "estimate", "expect", "plan", "intend", "potential", "may", "will", "should" or similar words suggesting future outcomes. Although the Company believes that these forward-looking statements are reasonable, undue reliance should not be placed on them as they are subject to known and unknown risks and uncertainties, many of which are beyond the Company's control. Forward-looking statements are not guarantees of future outcomes. There can be no assurance that the plans, intentions or expectations contained in the forward-looking statements or upon which they are based will in fact occur or be realized, and actual results may differ from those expressed or implied in the forward-looking statements. The difference may be material.
Second Wave is subject to the inherent risks associated with the exploration, development, exploitation and production of oil and gas. More particularly, material risk factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements contained in this news release include: adverse changes in commodity prices, interest rates or currency exchange rates; accessibility of capital when required and on acceptable terms; lower than expected production of crude oil and natural gas; production delays; lower than expected reserve volumes on the Company's properties; increased operating costs; ability to attract and retain qualified personnel or to secure drilling rigs and other services on acceptable terms; competition for labour, equipment and materials necessary to advance the Company's projects; unforeseen engineering, environmental or geological problems; ability to obtain all required regulatory approvals on a timely basis and on satisfactory terms; and changes in laws and governmental regulations (including with respect to taxes and royalties). This list is not exhaustive. Readers should also review the risk factors described in other documents filed by the Company from time to time with securities regulatory authorities in Canada, including its most recent annual information form, copies of which are available electronically at www.sedar.com and at www.secondwavepetroleum.com.
Specific forward-looking statements contained in this news release include statements regarding: the extent to which repair costs will be covered by insurance; the anticipated timing for completing the installation of a replacement unit; and the amount of production that will be shut in pending completion of repairs. In making such forward-looking statements, Second Wave has made various assumptions regarding, among other things: the accuracy of geological and geophysical data and interpretations of that data; future oil and natural gas prices; future capital requirements; future exchange rates; the accessibility and cost of associated services; the Company's ability to economically produce oil and gas from its properties and the timing and cost to do so; and its ability to obtain qualified staff, equipment and supplies in a timely and cost-efficient manner.
The forward-looking statements included herein are made as of the date of this news release and Second Wave undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by securities laws.
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