CALGARY, ALBERTA–(Marketwired – Oct. 2, 2014) – High North Resources Ltd. (TSX VENTURE:HN) (the “Company” or “High North“) is pleased to provide an operational update regarding recent positive production and drilling activity.
High North is encouraged to announce that production in September, 2014 averaged approximately 300 barrels of oil per day, or over 500 barrels of oil equivalent per day (“boe/d“) from the five horizontal wells drilled to-date on its 100 percent owned contiguous sections in the Girouxville-Mclean property. The 500 boe/d includes flared gas and associated natural gas liquids (“NGLs“) and reflects a material restriction on oil production due to the temporary flaring restrictions imposed by the Alberta Energy Regulator (the “AER“). The AER restrictions have resulted in previously agreed upon flaring limits and the wells currently being choked back.
The AER has granted approval to High North to flare up to a total of 1.1 million cubic feet per day (“Mcf/d“) of the associated gas production from three pads for the five horizontal wells to the end of July 2015, when the AER and High North expect gas conservation to commence through the Company’s proposed gas plant. At the request of the AER, the Company has filed a project development application to flare natural gas from the contiguous sections until gas conservation infrastructure is installed.
In addition, the Company has executed an agreement with TransCanada Pipelines Ltd. providing for the delivery of sales gas in 2015 from the Company’s central facility that is expected to be located at 16-10-76-21W5M and will include a gas plant with NGLs recovery, an oil battery and a water disposal facility.
The Company has commenced delivering clean oil as a result of the successful installation of the previously announced multi-well battery temporarily located at the 09-03-76-21W5M pad, which has led to reduced water disposal costs and has increased netbacks to the Company. Two of the Company’s wells in section 02-76-21W5M (08-02-76-21W5M and 16-02-76-21W5M) continue to flow oil. The well 09-02-76-21W5M was recently placed on pump and preliminary results indicate a 25 percent increase in oil production.
The Company’s 09-26-75-21W5M and 09-02-76-21W5M wells are on pump and continue to record fluid at surface, which, in the opinion of management, demonstrates the capability to increase oil production, subject to the lifting of the AER restrictions. In addition, remedial work is planned this week at the 08-21-76-21W5M well to rectify what appears to be encroachment into a water leg at the toe end of the well. The Company anticipates that the remedial work will further increase oil productivity. Pay thickness and oil saturation from core at the 08-21-76-21W5M well are higher than expected and compare favourably to the 16-02-76-21W5M core.
The Company intends to update its reserve report in October, 2014 through its third party evaluator, GLJ Petroleum Consultants and has initiated a geological assessment on the recently drilled 08-21-76-21W5M and 08-02-76-21W5M. The previous reserves report dated April 7, 2014 and effective March 31, 2014, was completed on proved reserves attributed to the Company’s wells in sections 02-76-21W5M, 26-75-21W5M and 35-76-21W5M.
The Company has surveyed locations for two offset wells, with drilling expected to commence during the fourth quarter of 2014.
Colin Soares, the Company’s President and Chief Executive Officer stated: “Progress to-date on High North’s Girouxville-Maclean property continues to be encouraging and I remain committed as the President and Chief Executive Officer to enhance value to the shareholders of High North. Our view about the existence of hydrocarbons on our lands continues to be proven to our expectations.”
Additional information about the Company is available under High North’s profile on SEDAR at www.sedar.com.
Certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of one barrel to six thousand cubic feet. Any figure presented in BOEs may be misleading, particularly if used in isolation. The calculation of BOEs is based on a conversion ratio of six thousand cubic feet of natural gas to one barrel of oil based on an energy equivalency conversion primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 barrel may be misleading as an indication of value.
Reader Advisory Regarding Forward-Looking Statements
Estimates of reserves and resources in this news release are deemed to be forward-looking information as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated, and that the reserves described can be profitably produced in the future.
This news release contains certain “forward-looking statements” or “forward-looking information” (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: oil production rates, estimated additional drilling locations, the timing, method, cost and recovery from future drilling operations, infrastructure development and the timing and effects thereof, facilities construction and equipment installation and the costs, timing, location and effects thereof, approval of the Company’s application by the AER and the existence of hydrocarbons on the Company’s lands. Statements regarding future production, capital expenditures and development plans are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks, regulatory changes and certain other known and unknown risks detailed from time to time in High North’s public disclosure documents, copies of which are available on High North’s SEDAR profile at www.sedar.com.
Although High North believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements were made, no assurances can be given as to future results, levels of activity and achievements and such statements are not guarantees of future performance. High North’s actual results may differ materially from those expressed or implied in forward-looking statements and readers should not place undue importance or reliance on the forward-looking statements. Statements including forward-looking statements are made as of the date they are given and except as required by applicable securities laws, High North disclaims any intention or obligation to publically update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
High North’s reserves estimates have been prepared and evaluated in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook. Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. There is at least a 50% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable reserves.
It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves or resources. Future net revenue values, whether calculated without discount or using a discount rate, are estimated values only and do not represent fair market value. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The reserve estimates provided herein are estimates only and there is no assurance that the estimated reserves will be recovered. Actual oil reserves may be greater than or less than the estimates provided herein.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
High North Resources Ltd.
Mr. Colin Soares
President and Chief Executive Officer
High North Resources Ltd.
Mr. Kyle Stevenson
Investor Relations and Director