CALGARY, AB–(Marketwired – July 06, 2015) – Kicking Horse Energy Inc. (“Kicking Horse” or the “Company”) (TSX VENTURE: KCK) is pleased to announce that it has acquired nine 100% working interest (“WI”) sections of Montney rights in the Kakwa area of Alberta (the “New Acreage”). The New Acreage is located immediately offsetting the Company’s West Kakwa acreage and within 3 miles of the Company’s East Kakwa production block. Kicking Horse intends to spud a vertical assessment well on the New Acreage in late Q3 2015. The Company acquired the New Acreage in exchange for 27 sections of deep rights in the Chime area of Alberta, while retaining the shallow rights in the Chime acreage. This exchange transaction was carried out on a zero net cost basis to Kicking Horse.
In a separate transaction, Kicking Horse sold 2.9 net sections, on an after earning basis, of various shallow rights in the Wapiti area, on acreage that it had previously farmed out, for $3.0MM cash consideration.
Steve Harding, President and CEO, commented, “Through these transactions we have substantially grown our core Kakwa area and received non-dilutive funding to help finance our planned upcoming vertical well on the newly acquired acreage. The new Kakwa acreage is strategically important to Kicking Horse, given that it is approximately 500 meters shallower than the disposed acreage and given its strategic proximity to our East Kakwa production and existing infrastructure. We continue to experience positive well results in the area and we are eager to apply our technical understanding at East Kakwa as we expand into the newly acquired acreage and our additional acreage at West Kakwa.”
Operational Update
At East Kakwa, the Company reports that it has resumed drilling. The Company spud the 13-25-63-6 W6M well (“13-25 Well”) on July 5, 2015. The 13-25 Well surface location is situated on the same drilling pad as the 13-23-63-6 W6M well (“13-23 Well”) drilled by Kicking Horse in Q1 2015. Once drilling of the 13-25 Well is finished, the Company plans to move the drilling rig to the New Acreage to drill a vertical test well. The Company intends to drill up to two additional wells in East Kakwa later in 2015. The 13-23 and 13-25 Wells are scheduled for completion operations in late Q3 or early Q4 2015 and are expected to be on production late in 2015.
Since commissioning the expanded 16-7 compressor and condensate stabilization facility (“16-7 Facility”) in May 2015, net Company production has averaged approximately 4,000 boe/d (57% liquids and 43% natural gas). Including downtime associated with commissioning the expanded 16-7 Facility, the Company’s Q2 2015 production is expected to average approximately 3,000 boe/d.
In May 2015, the Company brought its two longest reach wells, the 14-25 and 15-25-63-6 W6M wells (“14-25 and 15-25 Wells”) (75% WI) on production, both wells having been completed using sliding sleeve technology. The 14-25 and 15-25 Wells have produced at similar rates to each other, with the gross calendar day average of each well, on an initial 30 day production basis, being 1,423 boe/d (comprised of 3,600 mcf/d natural gas, 779 bbl/d condensate and 44 bbl/d natural gas liquids). The 14-25 and 15-25 Wells continue to produce, on a per well basis, at gross rates in excess of 3,000 mcf/d and approximately 180 bbl/mmcf of condensate. The Company advises that although the initial rates from the 14-25 and 15-25 Wells are encouraging, early production results are not necessarily indicative of the long-term performance or of ultimate recovery from these wells and longer term data is needed to more fully evaluate the impact on ultimate recovery.
The Company recently started up the 1-14-63-6 W6M well, with start up having been delayed in June 2015 due to ongoing completion operations of the 1-11 and 8-11-63-6 W6M wells. The 1-11 and 8-11-63-6 W6M wells have now been successfully completed, once again using the sliding sleeve technology. The wells have been flow tested and are expected to be brought onto production in August 2015.
Guidance
The initiation of the single rig drilling program at East Kakwa is expected to result in only modest increases to the Company`s 2015 annual production as the additional wells are not expected to come on stream until late in 2015. Production guidance for 2015 remains at 3,200 – 3,700 boe/d, with 2015 exit of approximately 4,000 boe/d. Total capital expenditures for 2015 are forecast to be approximately $65 million. The Company has the ability to be flexible with its capital program and can modify its plans should commodity prices or industry conditions change. With the expanded capital program, the Company will continue to maintain its strong balance sheet with Q4 2015 debt to annualized cash flow expected to be approximately 1.6x assuming US$60 WTI for the remainder of 2015.
About Kicking Horse Energy Inc.
Kicking Horse Energy Inc. is a public oil and gas company which is focused on the development of Alberta’s liquids-rich Montney Formation tight gas play. For more information, please see the Company’s website: www.kickinghorseenergy.com
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ADVISORY ON FORWARD-LOOKING STATEMENTS: This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words “expect”, “continue”, “anticipate”, “estimate”, “may”, “will”, “should”, “believe”, “plans”, “cautions” and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains statements concerning the Company’s potential for growth; the Company’s current wells which are awaiting completion; expanding its exploration activities onto newly acquired acreage and drilling a vertical well thereon; the anticipated timing for completing new wells and bringing additional wells on production; and the Company’s guidance for 2015 and specific guidance for exit 2015, including production rates, Kicking Horse’s capital program, capital budget for 2015 and annualized debt to cash flow for 2015.
Forward-looking statements or information are based on a number of material factors, expectations or assumptions of Kicking Horse which have been used to develop such statements and information but which may prove to be incorrect. Although Kicking Horse believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Kicking Horse can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. In particular, in addition to other factors and assumptions which may be identified herein, no assurances can be given respecting: whether the Company’s exploration and development activities respecting the Deep Basin project will be successful or that material volumes of petroleum and natural gas reserves will be encountered, or if encountered can be produced on a commercial basis; that the results of production tests will be indicative of the long-term performance of the recently drilled wells or of ultimate recovery from the recently drilled wells; the ultimate size and scope of any hydrocarbon bearing formations at the Deep Basin project; that additional drilling operations in the Deep Basin project will be successful such that further development activities in this area is warranted; that Kicking Horse’s efforts to raise additional capital will be successful; that Kicking Horse will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities will be consistent with past operations; the accuracy of the estimates of Kicking Horse’s reserve volumes; the general stability of the economic and political environment in which Kicking Horse operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Kicking Horse to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Kicking Horse operates; and the ability of Kicking Horse to successfully market its oil and natural gas products.
Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company’s products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Kicking Horse or by third party operators of Kicking Horse’s properties, increased debt levels or debt service requirements; inaccurate estimation of Kicking Horse’s oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Kicking Horse’s public disclosure documents. Additional information regarding some of these risk factors may be found under “Risk Factors” in the Company’s Annual Information Form dated as of December 31, 2014 filed on www.sedar.com. The reader is cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and Kicking Horse undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Certain Defined Terms
boe – barrels of oil equivalent
boe/d – barrels of oil equivalent per day
bbl – barrel
bbl/d – barrels per day
mcf – thousand cubic feet
mcf/d – thousand cubic feet per day
mmcf – million cubic feet
mmcf/d – million cubic feet per day
ADVISORY ON USE OF “boes”: “boes” may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 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 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Neither 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.
For more information please contact:
Steve Harding
President and Chief Executive Officer
Kicking Horse Energy Inc.
Phone: (403) 771-1091
Fax: (403) 695-3915
Email: sharding@kickinghorseenergy.com
www.kickinghorseenergy.com
Chad Kalmakoff
Vice President Finance and Chief Financial Officer
Kicking Horse Energy Inc.
Phone: (403) 234-8663
Fax: (403) 695-3915
Email: ckalmakoff@kickinghorseenergy.com
www.kickinghorseenergy.com
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