VANCOUVER, B.C. – TheNewswire – July 5, 2019 – Hillcrest Petroleum Ltd. (TSXV:HRH) (OTC:HLRTF) (the “Company” or “Hillcrest“) – As previously announced the upgraded West Hazel production facilities were commissioned in January, with initial production from two wells commencing concurrently. A third well was brought online in March, followed by the fourth well in early June. Resulting oil sales have delivered positive operating cash flow to the Company for the first time in over two years, with revenues from field operations covering all associated operating costs, including asset related finance charges.
The wells are currently producing over 4,500 barrels per day total fluid, consisting of oil and water with oil representing 1.5% to 2% of total fluid. While the total fluid volumes are as expected, oil cuts have yet to stabilize and return to those observed prior to field shut-in in 2015, which delivered higher oil production rates. Heavy oil reservoirs such as those in West Hazel typically take some time to return to previous production levels after prolonged shut-in periods. The Company is reviewing options to maximize oil production from current wells through existing facilities and possibly with further upgrades.
“We cannot overstate the importance these four wells have for Hillcrest” states Don Currie, CEO of Hillcrest Petroleum. “The revenues from production and sales are covering costs and showing a modest, but significant, monthly profit. The production sets a base for the Company to build on, which we are working toward in the third quarter. Hillcrest, with the support of its funding partners, continues to identify and evaluate potential producing asset acquisitions in the Western Canadian Sedimentary Basin. We will update shareholders as these activities progress.”
In addition, the Company announces that it has closed a non-brokered private placement wherein the Company has issued 3,900,000 Units at $0.05 per Unit (the “Offering“) for gross proceeds of $195,000. Each Unit consisted of one common share in the capital of the Company (“Share“) plus one-half of one common share purchase warrant. Each whole warrant will entitle the holder to purchase one additional Share at a price of $0.10 until May 10, 2021.
All securities issued in connection with this Offering will be subject to a statutory hold period ending on September 10, 2019 in accordance with applicable securities legislation. The net proceeds from the Offering will be used to advance the Company’s West Hazel oil project in Saskatchewan and for general working capital. The Company paid $1,629 in cash finder’s fees and issued 272,000 finder’s warrants in connection with the Offering. The finder’s warrants have the same terms as the Unit warrants.