CALGARY, Alberta, Jan. 17, 2018 (GLOBE NEWSWIRE) — Chinook Energy Inc. (TSX:CKE) (“Chinook” or the “Company”) is pleased to provide the following operational and corporate update.
On December 22, 2017, Chinook commissioned the on-time expansion of its compressor station at Birley/Umbach from 25 mmcf/d to 50 mmcf/d. Total costs for this facility expansion were $13.8 million ($11.1 million net). With the completion of this expansion, the Company now has the capacity to produce all of its 13 (11.23 net) Birley/Umbach wells. However, due to the extreme cold weather in December and the ongoing outages on the Enbridge Oak 16″ gathering line, Chinook currently only has three (2.5 net) Birley wells on production. As a result of this volatility, Chinook had 2017 exit production volumes of 3,572 boe/d as calculated from December 31, 2017 to January 10, 2018, with peak production of 5,170 boe/d on December 24, 2017. Enbridge is currently indicating a return to service of late February or early March at which time Chinook may flow its complete well inventories from its Birley/Umbach properties. The Company has further been impacted by the high price volatility at Westcoast Station 2 where the majority of it production is sold and continues to pursue transportation alternatives with more favorable pricing.
On December 11, 2017, Chinook completed a private placement of 6,450,000 flow-through common shares at $0.31 per share for total consideration of $2.0 million. Proceeds from this private placement will be used to fund the two well drilling program discussed further below.
Natural Gas Hedges
Chinook has entered into hedges to fix the Chicago City Gate Index price of natural gas on 6,000 mmbtu/d of natural gas production at an average of US$2.68 per mmbtu (approximately Cdn $3.85/mcf) from February 2018 to March 2019.
Due to the continued volatility in spot and future natural gas prices, specifically at Westcoast Station 2, Chinook has determined that it is prudent to defer providing 2018 guidance until commodity prices stabilize. Chinook’s Board of Directors has approved a $3.4 million capital program for the first half of 2018, funded predominately by the aforementioned private placement. This capital program for the first half of 2018 will include the drilling of two (2.0 net) vertical wells in the Birley/Umbach area as well as other minor expenditures. The drilling of the two vertical wells will help delineate 17 undrilled contiguous sections of 100% owned Montney rights (located three kilometres north of Chinook’s main Montney landblock and eight kilometres from the nearest well drilled into the Montney) by evaluating the pay thickness and reservoir quality throughout the entire 235 metre thick Montney zone. Chinook’s objectives for 2018 are to proactively manage its capital program to maintain optionality from its Montney asset base while preserving balance sheet strength and flexibility.
About Chinook Energy Inc.
Chinook is a Calgary-based public oil and natural gas exploration and development company which is focused on realizing per share growth from its large contiguous Montney liquids-rich natural gas position at Birley/Umbach, British Columbia.
For further information please contact:
|Walter Vrataric||Jason Dranchuk|
|President and Chief Executive Officer||Vice President, Finance and Chief Financial Officer|
|Chinook Energy Inc.||Chinook Energy Inc.|
|Telephone: (403) 261-6883||Telephone: (403) 261-6883|
|Oil and Natural Gas Liquids||Natural Gas|
barrels per day
|thousand cubic feet
million cubic feet
|mmcf/d||million cubic feet per day|
|btu||British thermal unit|
|mmbtu||million British thermal units|
|mmbtu/d||million British thermal units per day|
|boe||barrel of oil equivalent on the basis of 6 mcf/1 boe for natural gas and 1 bbl/1 boe for crude oil and natural gas liquids (this conversion factor is an industry accepted norm and is not based on either energy content or current prices)|
|boe/d||barrel of oil equivalent per day|