CALGARY, Alberta – (PIPE – TSX-V) Pipestone Energy Corp. (“Pipestone Energy” or the “Company”) is pleased to announce that it has successfully redetermined its Reserve Based Loan (“RBL” or “Credit Facility”) with its syndicate of banks, maintaining its credit capacity of $225 million.
RBL and Financial Liquidity Update:
Pipestone Energy has closed on its RBL redetermination with its corporate banking syndicate, consisting of National Bank Financial Inc., Bank of Montreal, ATB Financial, and Canadian Western Bank. The Credit Facility’s capacity has been maintained at $225 million, of which the Company was drawn approximately $184 million as of June 12th, 2020. The Company’s previously announced $60 million capital program for 2020 is more than 95% complete, and with minimal capital expenditures forecast for the remainder of 2020, the Company expects to generate cash flow in excess of capital spending. As part of the amendment to its Credit Facility, the Company is restricted from spending more than $65 million of capital in 2020 without unanimous consent from its banking syndicate. This provision is a temporary amendment, which will terminate at the next redetermination, scheduled for November 2020.
Pipestone Energy continues to actively manage its production in response to very high volatility in crude oil prices over the past few months. Due to very low Edmonton condensate pricing during May 2020, the seven wells on the recently tested 6-24 pad were shut-in for the month. Despite this, based on field estimates, the Company averaged ~14,700 boe/d (64% gas and 36% natural gas liquids, including condensate) in May from the North of the Wapiti River 15-14 and 3-1 pads (19 total wells) as well as contribution from the legacy South of the Wapiti production. With oil prices improving over the past two weeks the Company is gradually bringing wells from the 6-24 pad back on-stream. The recently completed six well 6-30 pad is also now available for production, with installation of wellsite facilities recently completed for $0.5 million per well which is the lowest equipping and tie-in cost achieved to date at Pipestone. As previously disclosed, the 6-30 pad is a pacesetter on all-in realized DCE&T cost at $5.5 million (2,440m lateral & 2.3 T/M proppant loading).