CALGARY, ALBERTA–(Marketwired – Sept. 8, 2016) – Gear Energy Ltd. (“Gear”) (TSX:GXE) is pleased to provide an update on operations to date for the 2016 capital program.
- To date Gear has successfully drilled 10 horizontal heavy oil wells and is currently drilling the last well of the summer program. Results have been encouraging in both Wildmere, Alberta and Paradise Hill, Saskatchewan with costs averaging under original estimates and initial production rates exceeding expectations. As a result of the drilling costs savings to date, the 2016 drilling program has been expanded to 14 wells with the addition of two more wells in Paradise Hill with no material net increase in total capital anticipated. The phase two portion of the 2016 drill program is estimated to commence in the fourth quarter and will consist of two full section horizontal Basal Belly River light oil wells in Wilson Creek, and one exploratory horizontal Mannville heavy oil well to be drilled into a potential new core area that currently covers approximately 11 sections of 100% Gear land.
- Wildmere Cummings. Gear successfully drilled three new quad-lateral unlined horizontal oil wells into the extensive Cummings formation in Wildmere. Initial production results have come in substantially above initial expectations at average 21 to 30 day peak initial rates of approximately 160 bbl/d per well (approximately 40% higher than the first full month of production from the original quad well, which was used as the basis for budget expectations). The outperformance is attributed primarily to improved pay quality and increased total wellbore lengths compared to the original quad-lateral well drilled by Gear in 2015. Average costs for the quad wells were approximately 14% higher than original estimates due to the increased lengths and a one-time rig move cost. The three new wells were drilled and put on production for total costs between $1,062,000 and $880,000 yielding an average all-in capital cost of $966,000 per well.
- Paradise Hill McLaren. Gear has drilled seven successful single lateral lined McLaren wells to date in Paradise Hill with the last well of the expanded eight well program currently underway. The average all-in costs have come in at $530,000 per well, approximately 21% lower than original estimates. These cost reductions should significantly improve the already competitive economics of the play and have provided the ability to add two additional wells to the program with no material increase in total capital costs. Three of the wells are currently on production and early results are meeting expectations.
- Total corporate production continues to track within guidance with August volumes of approximately 5,800 boe/d influenced by temporary restrictions due to the shut-in of production adjacent to offset drilling and September to date averaging approximately 6,200 boe/d. With five more Paradise Hill wells and the three wells planned in the fourth quarter still to come on production, Gear remains on track to meet or exceed current estimated December average guidance of 6,400 boe/d.
- Gear expects to release detailed third quarter 2016 results and guidance for 2017 after market close on November 9, 2016.
About Gear Energy Ltd.
Gear is a Canadian exploration and production company with predominantly horizontal heavy and light oil production in central Alberta and west central Saskatchewan. The current and ongoing business plan is to continue focusing on being a low cost operator, drilling economic wells and acquiring assets on an accretive basis.