As previously announced, Gear responded quickly to the dramatic weakening of Canadian oil prices experienced in the fourth quarter of 2018 by temporarily deferring oil production. This activity was intended to maximize realized revenue on developed barrels and was accomplished through a combination of storage, temporary shut-ins and capital reductions. Fortunately, the oil market has improved, which leaves Gear in a strong position in early 2019 to take advantage of these decisions. The current forward market is predicting first quarter 2019 realized oil prices for Gear’s heavy oil and central Alberta light oil that are approximately six and three times higher, respectively, than the estimated December amounts.
Gear is currently forecasting to exit 2018 with inventories of approximately 40,000 barrels of heavy oil and 10,000 barrels of light oil that are anticipated to be sold in early 2019 at materially higher prices. In addition, field activities will commence in early 2019 to resume production from the majority of heavy and light oil wells that were temporarily shut-in. In aggregate, these activities should assist in providing a relatively stable production base through the first half of 2019.
Capital planning for 2019 continues to progress as the team works to incorporate the daily volatility in both WTI oil prices and the relevant benchmark differentials. Further details on 2019 capital spending plans will be provided early next year.