Standard Lithium Ltd. press release
Result Energy Inc. provides Operations Update and 2006 Capex Plans
TSXV - TSX Venture Exchange · Lithium · Bromine · Potash · Sodium · Canada
CALGARY, Jan. 12 /CNW/ - Result Energy is pleased to provide an operations update and estimated capital budget for 2006. For the second half of 2005 Result's exploration and development activities were at an all time high and delivered record growth, as summarized below:
Peace River Arch core area
At the Worsley property, Result (36.4% WI) and its partners constructed an extensive gas gathering system in the 4th quarter, which brought three natural gas wells on stream. Although flush production from these wells peaked at over 8,000 mcfd (2,900 mcfd net) stabilized flow rates may not become evident for several months. As such, these wells are being evaluated to better understand the reservoir size and deliverability.
Also at Worsley, Result (50% WI) and its partner have secured 2 rigs to drill 2 identified targets. The first rig moved to location January 9 and will be followed by the second approximately two weeks later (January 23). Result is confident that the two wells, if successful, will substantially contribute to gas production in the area and would expect to have them both on-stream before April 1, 2006.
In late 2005, Result expanded exploration activities to Eureka in the northeastern part of the Peace River Arch and drilled 2 (1.0 net) exploration wells based on 3D seismic. Completion operations are underway. If successful, these wells will be tied into the newly constructed Worsley gathering system.
In the Clearhills property, Result and several other area producers have reached an agreement with a third party mid stream operator to tie-in 1,500 mcfd (250 boed net of shut-in gas). These facilities are expected to be on stream by early Q2 2006. The Company also intends to drill 4 (1.8 net) additional wells in this area during Q1 2006.
Central Alberta core area
At the Winfield/Pembina area, in West Central Alberta, Result (50% BPO) recently drilled and cased a second Viking gas well based on 3D seismic. This well is a follow-up to a successful Viking well drilled earlier in 2005. Subject to equipment availability, Result expects to commence completion and tie-in operations for the second well by mid January. Result has substantially completed the tie-in for the first Viking well; however a third party processor has experienced facilities construction delays due to landowner issues. The facilities application is before the EUB and Result expects a satisfactory resolution before mid-February, with both wells expected to be on production by the end of February. Based on the flow test for the 02-35 well, Result anticipates combined productive capability of these two wells to be 3,600 - 5,000 mcfd (300 - 400 boed net).
An Ostracod/Ellerslie exploration prospect in this area (50% WI) was drilled and tested in Q4, but experienced non economic flow rates and will be abandoned in 2006.
Result is currently drilling a Nisku test (50% WI) in the Pembina area. Drilling operations are expected to be completed by late January.
Eastern Core Area
At the Dodsland East property (50% WI), Result completed pipeline tie-in operations for 4 Viking natural gas wells in late December, and commenced flowing the wells at an initial combined production rate of 400 mcfd net. Pending stabilized production results from these 4 wells, Result will apply for down spacing to maximize recovery from this property in a similar fashion to the program that Result delivered at its other Viking gas properties in the area.
Result has a 100% natural gas well in the Viking - Kinsella area that was brought on-stream in late December with an initial flow rate of 180 mcfd.
The Company is also completing a 6 section farm-in at Dodsland. The property will be developed at 100% WI and is expected to yield the same low risk Viking prospects and down spacing potential as Result's existing Dodsland properties.
After reaching 1,000 boed in late December, Result's field estimated production is now approximately 810 boed mostly attributed to start-up tuning of flow rates, continued testing and 3rd party delays at Pembina. Significant production growth was realized by the end of Q4-05, as compared to the Q3-05 average production rate of 448 boed. The Company also has approximately 500 boed from 6 wells that are shut-in or tested and awaiting tie-in over the next quarter. Furthermore, Result is currently completing 4 wells with a combined potential of 375 boed that, if successful, will be tied in by early Q2. Bill Matheson, President and CEO, noted, "We were extremely pleased with our accomplishments in 2005, and our exploration and development prospect inventory heading into 2006. While drilling, completion and pipeline tie-in equipment will continue to be a challenge in 2006, we still were able to drill a total of 30 wells (14.9 net) in 2005." For 2005, Result generated an overall 84% success rate, in the form of 24 (12.1 net) natural gas and potential natural gas producing wells, 1 (0.6 net) producing oil well, 3 (1.5 net) suspended gas wells, and 2 (1.0 net) wells which are planned to be abandoned.
Other Developments
Based on recent exploration and development success as well as expanded operating activity, the Company is very pleased to announce that Mr. Marty Scase, B. Comm has joined the team as Manager, Land and Business Development effective January 9, 2006. Mr. Scase previously worked for Petro-Canada and Talisman Energy. Most recently, he was Senior Land Negotiator at StarPoint Energy Ltd. Mr. Scase holds a Bachelor of Commerce degree in Petroleum Land Management from the University of Calgary.
Result's operating loan facility with ATB Financial has been increased to $6.5 million as of December 22, 2005. It is expected that the facility will be increased again in March upon completion of the December 31, 2005 third party reserve report.
Result's Board of Directors has approved an initial 2006 capital budget of $18 million. Due to recent land acquisition and farm-in programs completed, we expect to participate in at least 40 new wells in 2006. Building on our 2005 objective of diversification into 3 core areas, the timing of these wells should be spread out across the 4 quarters, and provide a prudent mix of exploration and development prospects.
Result Energy Inc. is a publicly traded Canadian energy company involved in the exploration and development of oil and gas properties in western Canada. Result trades on the TSX Venture Exchange under the symbol "RTE".
The TSX Venture Exchange does not accept responsibility for the adequacy and accuracy of this release.
Investors are cautioned that this news release contains forward looking information. Such information is subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information, as no assurances can be given as to future results, levels of activity or achievements
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions herein are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
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