CALGARY, July 16, 2013 /CNW/ – Connacher Oil and Gas Limited (CLL – TSX; “Connacher” or the “Company”) is pleased to provide the following operational update for Q2 2013 and confirms the timing of its Q2 2013 conference call and call-in details.
Production
Connacher’s production for Q2 2013 averaged 11,500 bbl/d based on field estimates. Production was 7% lower than the prior quarter (Q1 2013 12,406 bbl/d) due to planned interruptions associated with steam generator upgrades completed at Algar in May. Following completion of the upgrades, field estimates for June production averaged 12,500 bbl/d.
Operations
Our 2013 drilling program was completed in Q2 2013 and consisted of four infill wells on Pad 102 and four new well pairs at Pad 104. All of the wells were completed in Q2 2013 and construction of surface facilities and tie-in is continuing at both pads.
We expect to begin steaming the new well pairs at Pad 104 at the end of Q3 2013 for approximately 90 days. These wells will then be converted to production by the end of Q4 2013. The Pad 102 infill wells are expected to be on steam for 30 to 60 days. The first well will begin steaming in July. All four wells are expected to be placed on production by the end of Q4 2013. The replacement well pair on Pad 202 at Algar was placed on production in early July.
As a result of the SAGD+ trial on well pair 203-1 at Algar, average bitumen production rates were approximately 30% higher in the first four months of 2013 than the four months prior to the beginning of the test in May 2012. Steam injection was approximately 10% less over the same comparative period. Solvent injection rates over the entire test period have averaged 6% of the steam volume injected and it is estimated that 92% of the cumulative solvent injected has been recovered. Five months into the test on 203-1, the SOR reached a level approximately 33% lower than SORs prior to the test and have remained at these lower values despite changes to the steam rate. In May 2013 the producer well was converted from gas lift to a submersible pump and the results of this change are being assessed.
We have been piloting SAGD+ at a fourth well at Algar, 203-4, since July 2nd. The trial will continue on both 203-1 and 203-4 pairs through the end of 2013. We are also planning to add an additional trial on at least one of the new well pairs at Pad 104.
Regulatory approval for the SAGD+ commercial project was received on June 5th. We are currently evaluating the feasibility of a SAGD+ commercial project as part of our 2014 capital plan.
During Q2 2013 a key focus of our operations was to reduce the amount of diluent in our dilbit. As a result, we have reduced the diluent blend ratio (“DBR”) from 25% to 20% and have seen reductions as low as 18%. We expect this reduction in the DBR to be sustainable. Due to this success, we do not plan to complete the Diluent Recovery Unit (the “DRU”) in 2013. Tankage previously completed for the DRU will be tied in to increase storage capacity at Pod One. We will continue to evaluate the future of the DRU as part of our 2014 capital plan.
Marketing
In Q2 2013 bitumen volumes shipped to rail destinations outside of Alberta averaged approximately 9,200 bbl/d (80% of sales) compared to approximately 6,800 bbl/d (55% of sales) in Q1 2013. The balance of the dilbit sales were to intra-Alberta markets.
For the balance of 2013 the Company has approximately 7,500 bbl/d of production hedged at WTI prices ranging from US$90-$105. For 2014 the Company has approximately 4,700 bbl/d hedged at WTI prices ranging from US$90-$96.
Q2 2013 Conference Call Details
Connacher will host its quarterly conference call on August 15, 2013 at 8AM MDT. Interested participants can call in to (888) 231-8191. Please use the Conference ID# 98592661. Participants are encouraged to call in 5 minutes prior to commencement.
About Connacher
Connacher is a Calgary-based in-situ oil sands developer, producer and marketer of bitumen. The Company holds a 100 percent interest in approximately 500 million barrels of proved and probable bitumen reserves and operates two steam assisted gravity drainage (SAGD) facilities located on the Company’s Great Divide oil sands leases near Fort McMurray, Alberta.
Forward Looking Information
This press release contains forward looking information including expectations for the timing of placing wells on steam injection and the anticipated timing for converting such wells to production, the commissioning of additional SAGD+ trials, the continued sustainability in the reduction in the DBR and future plans for the DRU.
Forward looking information is based on management’s expectations regarding the Company’s future financial position, the Company’s future growth, results of operations and production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and future economic conditions. Forward looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates, the uncertainty of geological interpretations, the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), risk of commodity price and foreign exchange rate fluctuations, risks associated with the impact of general economic conditions, risks and uncertainties associated with maintaining the necessary regulatory approvals and securing the financing to proceed with the operation and continued expansion of the Great Divide oil sands project.
In addition, reported average production levels may not be reflective of sustainable production rates and future production rates may differ materially from the production rates reflected in this press release due to, among other factors, difficulties or interruptions encountered during the production of bitumen.
Additional risks and uncertainties affecting Connacher and its business and affairs are described in further detail in Connacher’s Annual Information Form for the year ended December 31, 2012. Although Connacher believes that the expectations in such forward looking information are reasonable, there can be no assurance that such expectations shall prove to be correct. The forward looking information included in this press release is expressly qualified in its entirety by this cautionary statement. The forward looking information included herein is made as of the date of this press release and Connacher assumes no obligation to update or revise any forward looking information to reflect new events or circumstances, except as required by law.
SOURCE: Connacher Oil and Gas Limited
For further information:
Contact
Chris Bloomer
Chief Executive Officer
Greg Pollard
Chief Financial Officer
Connacher Oil and Gas Limited
Phone: (403) 538-6201
Fax: (403) 538-6225
Suite 900 – 332 6th Avenue SW
Calgary, Alberta T2P 0B2
inquiries@connacheroil.com
www.connacheroil.com