CALGARY, ALBERTA–(Marketwired – Oct. 4, 2017) – Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX:PRQ) continues to focus on expanding its core Ferrier operating area, improving the Company’s balance sheet, lowering its cost structure and growing the Company’s production and resulting funds from operations. Petrus is pleased to announce the following recent developments which demonstrate the Company’s commitment to achieving these objectives.
Petrus has entered into a farm-in agreement (the “Farm-in Agreement”) to drill two extended reach horizontal (“ERH”) Cardium wells in Ferrier, the Company’s core operating area. Upon drilling these wells, Petrus will also earn a working interest in three additional sections of land in Ferrier. Petrus expects the ERH wells will be drilled with a lateral length of approximately 2 sections. The Company estimates that the Farm-in Agreement will contribute 16 gross (5.2 net) Cardium locations to its drilling inventory.
UPDATED 2017 OUTLOOK
In order to accommodate for the Farm-in Agreement, Petrus’ Board of Directors has approved a $10 million increase to the Company’s capital budget for 2017 to $60 to $70 million, increased from the $50 to $60 million previously approved for 2017. The budget increase is expected to be funded through availability under the Company’s existing credit facilities. The Company’s capital expenditure program anticipates drilling 16 gross (11.8 net) Cardium wells in Ferrier. The capital expenditure program also provides for investment in facilities; the processing and compression capability of the Ferrier gas plant is expected to double, reaching a capacity of approximately 60 mmcf/d in early October 2017.
Petrus’ estimated August monthly field production is 10,650 boe/d. Subsequent to the end of the second quarter of 2017, Petrus drilled 3 gross (2.2 net) wells in Ferrier. The wells are currently drilled but uncompleted (“DUC”) and the fracture stimulations are scheduled to coincide with the completion of the facility expansion. New production related to the 2.2 net DUC wells and the 2 net ERH wells related to the Farm-in Agreement are expected to be brought on stream in the fourth quarter once additional processing capacity is available at the Ferrier gas plant.
PROPERTY ACQUISITION & DISPOSITION ACTIVITY
Since the acquisition of Arriva Energy Inc. on September 9, 2014, Petrus has drilled 26 wells in the Ferrier area and participated as a working interest partner in 10 additional wells. In that same period, the Company has increased net production in Ferrier from approximately 1,000 boe/d to over 7,300 boe/d and increased its undeveloped land position in Ferrier by five times. This growth is in part due to strategically divesting non-core assets which has enabled the Company to acquire additional assets in Ferrier.
On August 15, 2017 Petrus closed the disposition of its working interest in certain non-core oil and natural gas properties in the Company’s Foothills area for cash consideration of $4.9 million. The assets disposed of included approximately 150 boe/d of production along with related land and infrastructure. The proceeds were utilized to repay indebtedness under the Company’s credit facilities.
Petrus has initiated a non-core asset divestiture process for its Central Alberta (Thorsby) and Foothills areas, and has engaged GMP Securities L.P. (“GMP FirstEnergy”) as its exclusive financial advisor to assist with the process. The process is expected to take place in the fourth quarter of 2017. The divestiture of these non-core assets is expected to further enhance Petrus’ balance sheet and continue to strengthen the focus on the Company’s core Ferrier operating area.
Petrus is a public Canadian oil and gas company focused on property exploitation, strategic acquisitions and risk-managed exploration in Alberta.