(TSX: AAV) (NYSE: AAV)
CALGARY, Dec. 4, 2013 /CNW/ – Advantage Oil & Gas Ltd. (“Advantage” or the “Corporation”) is pleased to provide the following operational update related to our current Phase VI Glacier Development program and an update on our strategic alternatives process. Our Phase VI drilling program commenced in August 2013 and is designed to increase Glacier production to 135 mmcfe/d in April 2014 which represents a production growth of 25% compared to April 2013.
New Glacier Upper Montney Well Tested at a Record 21 Mmcf/d
- A new Upper Montney well located at 100/5-20-76-12w6 was recently completed with a 14 stage high rate slick water frac utilizing an open hole packer system. This well is located in the eastern portion of our Glacier land block north of our Glacier gas plant.
- The new 100/5-20-76-12w6 Upper Montney well was production tested for 71 hours and demonstrated a final gas flow rate at the end of the test period of 18.4 mmcf/d at a final flowing pressure of 8,633 kpa. The final gas flow rate normalized to our gas gathering system average pressure of 3,000 kpa is 21.2 mmcf/d.
- The 100/5-20-76-12w6 well demonstrated a final gas flow rate that is two to three times better than directly offsetting older Upper Montney wells completed with our previous frac technique. This new Upper Montney well also represents the best well we have drilled at Glacier on a total rate and rate per frac basis as compared to our 80 Glacier Upper Montney wells and the 105 total Glacier Montney wells drilled and completed to date.
- We believe that continued refinement of completion techniques and the development of new technology combined with our significant experience at Glacier will improve well performance in all layers of our Montney “Pentastack”.
Lower Montney Wells Continue to Outperform
- In order to prove up reserves in the eastern half of our Glacier land block where no Lower Montney reserves have been booked by our third party independent engineering firm, Sproule & Associates Limited (“Sproule”), several Lower Montney wells are included in our current Phase VI drilling program. One of these wells is located at 100/1-16-76-12w6 which has recently been drilled and completed with a 14 stage high rate slick water frac utilizing an open hole packer system.
- The new 100/1-16-76-12w6 Lower Montney well was production tested for 72 hours and demonstrated a final gas flow rate at the end of the test period of 6.7 mmcf/d at a final flowing pressure of 4,218 kpa. The final gas flow rate normalized to our gas gathering system average pressure of 3,000 kpa is 6.8 mmcf/d.
- The success of the 100/1-16-76-12w6 well demonstrates that the Lower Montney reservoir is highly productive in the eastern half of our Glacier land block. Additionally, this successful result provides additional confidence that conversion of economic contingent resources, as identified by Sproule, is possible through drilling and utilization of revised completion techniques.
- As indicated in our press release dated November 7, 2013, two new Lower Montney wells located in the southwest portion of our Glacier land block were completed in October 2013 and tested at a combined final flow rate of 20 mmcf/d. These two new wells are the southernmost horizontal wells we have drilled in the Lower Montney and illustrate that the southern portion of our Glacier land block is also capable of being highly productive in the Lower Montney formation. These two new wells will also result in new reserve additions in this area.
- These two new Lower Montney wells were brought on-production in November 2013 and demonstrated strong production rates in excess of the final test rates. The first Lower Montney well at 100/15-31-75-13w6 commenced production at a rate of 11.9 mmcf/d and the second Lower Montney well at 100/10-31-75-13w6 commenced production at a rate of 11.8 mmcf/d. After two weeks of continuous production, both wells are still capable of sustaining these rates and have been choked back due to wellsite facilities constraints.
- These two new Lower Montney wells are demonstrating initial production trends that are similar to our earlier Lower Montney well at 100/7-7-76-13w6 which was completed with a similar frac design in Q1 2013. The 100/7-7-76-13w6 well was brought on production at 12 mmcf/d and has produced 1.8 bcf after nine months of production as compared to an average of 0.61 bcf per well from older offset Lower Montney wells.
- These initial production rates and sustainment of strong rates significantly outperform our historical Lower Montney type curves.
Glacier Gas Plant Throughput Tested at 139 Mmcf/d
- Strong well results at Glacier combined with the processing of third party natural gas volumes during November provided the opportunity to conduct a throughput test at our Glacier gas plant.
- For several sustained periods in November, the Glacier gas plant processed natural gas volumes up to 139 mmcf/d sales with no operational issues. Recent regulatory approvals have been received and the gas plant is currently licensed to handle up to 160 mmcf/d of natural gas. The addition of one new compressor to the existing gas plant is required to increase processing capacity to 195 mmcf/d of natural gas sales.
Phase VI Glacier Capital Development Program On-Track
- Our Phase VI Glacier capital development program which is designed to ramp Advantage production to 135 mmcfe/d is progressing on-track with three drilling rigs.
- To date, 13 of the total 22 wells in the program have been rig released. Of the 13 wells drilled, six are Lower Montney wells, three are Middle Montney wells and four are Upper Montney wells.
- We anticipate additional well completion information will be available during the latter half of December 2013.
Strategic Alternatives Process Update
- The Corporation’s previously announced strategic alternatives process remains ongoing. The bid date communicated to interested parties has now passed and the Corporation, along with its financial advisors, is reviewing the proposals received from those parties who submitted bids.
- The Corporation cautions that there is no assurance that the strategic process will result in an acceptable transaction.
The information in this press release contains certain forward-looking statements, including within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future intentions or performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “demonstrate”, “illustrate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “possible”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “confidence”, “would” and similar expressions and include statements relating to, but not limited to, anticipated effect of refinement of completion techniques, development of new technology and our experience at Glacier on well performance; the Corporation’s anticipated drilling and completion plans; anticipated timing of additional well completion information; the Corporation’s development plan to increase production at Glacier and the anticipated production levels