CALGARY, ALBERTA–(Marketwired – Oct. 16, 2013) – Questerre Energy Corporation (“Questerre” or the “Company”) (TSX:QEC) (OSLO:QEC) is pleased to report on the test results from its fifth horizontal well at 05-23-63-6W6M (the “05-23 Well”) in the Kakwa-Resthaven area of west central Alberta.
The 05-23 Well is approximately two miles west of the existing producing wells on its joint venture acreage and 70m to 100m deeper vertically. The well was successfully completed with a seven-stage slick water fracture stimulation in the 1400m horizontal section. The well was tested for a 170-hour period thereafter.
Over the last 24 hours of the production test, the well flowed 815 bbl/d of condensate and 3.7 MMcf/d of natural gas against anticipated gathering system pressure of approximately 2000 kPa (290 psi) on choke sizes ranging from half inch to one inch. During the entire test, the well flowed at an average condensate to natural gas rate of 195 bbls per MMcf. The well will be tied into the local gathering system shortly. Questerre holds a 25% working interest in the 05-23 Well.
The Company also reported that its next joint venture well located at 16-25-63-5W6M (the “16-25 Well”) has reached total measured depth of 4680m. Production casing is being run into the 16-25 well and, subject to equipment availability and weather, completion operations are scheduled to begin next month. Drilling time from spud to total measured depth for the 16-25 Well took approximately 34 days, 12 days shorter than previous wells on its joint venture acreage.
Drilling and completion costs are demonstrating learning curve benefits earlier than originally expected. Questerre estimates current well drilling and completion costs at less than $8 million. This is a cost savings of approximately 25% of the initial well costs of $10 million. Questerre expects further material savings will be realized in the future through pad drilling and additional efficiencies.
Questerre updated the testing of the 15-01 Well, recently designated as the 09-01-62-6W6M Well (the “09-01 Well”).
A chemical soak and squeeze on the Montney formation was successful in re-establishing gas flows and high pressure on surface. The flow from the 09-01 Well included very anomalous hydrogen sulphide rates.
Michael Binnion, President and Chief Executive Officer of Questerre, commented, “We were pleased we were able to re-establish high pressure high rate flow from the 09-01 Well. The high sour and low liquids rates are unusual and could reflect contribution from another zone. Based on these results, we are reviewing a possible new up-hole gas discovery.”
Due to the high pressure and sour gas rates encountered, well control and safety was the main priority during these operations. Furthermore, regulatory restrictions on testing of critical sour wells limit Questerre’s ability to conduct an extended cleanup and flow back for the 09-01 Well. Further testing of this well will require critical sour processing facilities and pipelines. Currently there are no such sour facilities in the immediate area. As a result, the 09-01 Well is currently suspended as a potential gas producer while the Company evaluates options for producing the well and new drilling on this block.
On its joint venture acreage to the north where the Company holds a 25% working interest, the operator reported that it has contracted a drilling rig for one year and the next well on this acreage is expected to spud in November.
The operator also reported that equipment installation of the joint central compression and condensate stabilization facility is underway. The facility has a capacity of 15 MMcf/d plus associated liquids. It is designed to address the existing production constraints and is anticipated to be on-stream prior to the end of 2013.
Questerre Energy Corporation is leveraging its expertise gained through early exposure to shale and other non-conventional reservoirs. The Company has base production and reserves in the tight oil Bakken/Torquay of southeast Saskatchewan. It is bringing on production from its lands in the heart of the high-liquids Montney shale fairway. It is a leader on social license to operate issues for its Utica shale gas discovery in the St. Lawrence Lowlands, Quebec. In conjunction with a supermajor, it is at the leading edge of commercializing a proven process to unlock the massive resource potential of oil shale.
Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment and society. We are committed to being transparent and are respectful that the public must be part of making the important choices for our energy future.
This media release contains certain statements which constitute forward-looking statements or information (“forward-looking statements”), including the initial results from the 05-23 Well, the timing of completion operations for the 16-25 Well, the expectation of further reduction in drilling and completion costs for wells drilled in the area, the possibility of a new up-hole gas discovery in the 09-01 Well, the Company’s options to produce this well and further drilling, and the on-stream date for the new central compression and condensate stabilization facilities. Although the initial rates from the 05-23 Well are very encouraging, production test results are not necessarily indicative of long-term performance or ultimate recovery from the 05-23 Well. In the future, the joint venture plans to release 30 day initial production rates from future wells drilled in the area, the results of which are expected to be more reflective of longer term performance. Although Questerre believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information available to Questerre. Such statements are 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. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Questerre does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
Barrel of oil equivalent (“boe”) amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil and is based on an energy equivalent conversion method application at the burner tip and does not necessarily represent an economic value equivalent at the wellhead.
This news release does not constitute an offer of securities for sale in the United States. These securities may not be offered or sold in the United States absent registration or an available exemption from registration under the United States Securities Act of 1933, as amended.
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