Exall Energy Corporation is pleased to update drilling, production and waterflood operations in the Marten Mountain, Mitsue area. Exall’s public filings can all be found at www.exall.com or www.sedar.com.
- Exall’s current average daily production for December is approximately 1,330 boepd, an increase of 42% over the September average,
- Two wells were drilled between the Central Waterflood (“WF”) and the North WF areas during Q4 with production to start in late December,
- Ongoing efforts to address production issues have been successful in the various WF areas,
- Current production from the South WF area is 418 boepd (302 boepd net), an increase of 24% from 340 boepd (243 boepd net) through November,
- The Central WF continues to improve as the result of well optimization and the installation of an Electric Submersible Pump (ESP); it is currently producing 657 boepd (458 boepd net), an increase of 104% over the Q3 average,
- A water source well was drilled, completed and equipped during Q4 and injection of water has begun in the North WF Approval area,
- Optimization efforts in the North WF and the addition of two producing wells has increased production to an average of 818 boepd (557 boepd net) during the first week of December, an increase of 120% over August 2012,
Two wells were drilled between the Central WF and the North WF areas during Q4. Both wells were cased as Slant Holes (“SH”). The first well has been swab tested and recovered oil at 50 to 70 bopd. A pressure buildup indicated that a fracture (“frac”) stimulation was warranted, which was then performed on the well. Currently the well is undergoing frac fluid and sand cleanup.
The second well has also been completed and swab tested, recovering oil at the rate of 100 bopd. The well is currently being equipped and is expected to be on production in late December at a similar rate.
The wells are the first two of up to six infill wells to be drilled between the North Waterflood and the Central Waterflood areas through 2013.
Production and Waterfloods
Exall’s current average daily production for December is approximately 1,330 boepd, an increase of 42% over the September average, and does not include production from the two most recently drilled wells.
The Company groups the Waterflood Approvals in the Marten Mountain area into three project areas; the South WF, Central WF and North WF. The production issues faced in there three project areas are being successfully addressed, as described below.
Low reservoir pressure in the South Waterflood project resulted in reduced production from six wells. Optimization efforts aimed at improving well performance and oil recovery appear to be having a positive effect. Polymer treatments were performed on two injection wells resulting in reduced water cuts in one adjacent well, along with an increase in oil production. Current production from the South WF area is 418 boepd (302 boepd net), an increase of 24% from 340 boepd (243 boepd net) through November.
The Central WF, continues to improve as the result of well optimization and the installation of an Electric Submersible Pump (ESP) into the newest producing well. The new oil well, which was producing 165 boepd, is now producing at 450 boepd. The Central WF project is currently producing 657 boepd (458 boepd net), an increase of 104% over the Q3 average.
A water source well was drilled, completed and equipped during Q4 and injection of water has begun in the North WF Approval area. Optimization efforts in the North WF and the addition of two producing wells has increased production from 375 boepd (253 boepd net) in August 2012 to an average of 818 boepd (557 boepd net) during the first week of December, an increase of 120%. As well, three wells are being evaluated as potential candidates for the installation of ESP’s in order to lower the pump in the wellbore and increase production.
Exall has begun facilities modifications to remedy high producing well backpressure in the North Channel wells. Pipeline pressure on the North leg of the gathering system is high due to the 220 meter elevation change along the route over Marten Mountain. The Company believes that the back-pressure is inhibiting maximum production from the wells in that area and will be taking appropriate measures to remedy the problem. The installation of casing gas compressors on three producing wells has improved production as well as operating efficiency. Additional facilities modifications are ongoing.
Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta. Exall Energy is currently developing the new Mitsue area “Marten Mountain” discovery in north-central Alberta.
Exall Energy currently has 63,413,854 common shares outstanding. The Company’s common shares are listed on the Toronto Stock Exchange under the trading symbol EE. The Company’s convertible debentures are listed on the Toronto Stock Exchange under the trading symbol EE.DB.
This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company’s most recent Annual Information Form under the heading “Risk Factors” which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval (“SEDAR”) located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.
For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators’ National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.