CALGARY, ALBERTA--(Marketwire - Nov. 8, 2011) - PetroBakken Energy Ltd. ("PetroBakken" or the "Company") (TSX:PBN - News), a 59% owned subsidiary of Petrobank Energy and Resources Ltd. (TSX:PBG - News), is pleased to announce third quarter 2011 financial and operating results and current production in excess of 47,500 boepd (based on field estimates). PetroBakken third quarter 2011 financial and operating results were highlighted by funds flow from operations of $152.4 million ($0.81 per basic share and $0.76 per diluted share), a top decile operating netback of $50.04 per barrel of oil equivalent ("boe") and average production of 39,074 barrels of oil equivalent per day ("boepd") (85% light oil and NGLs). Third quarter production was significantly impacted by shut-in wells and wet weather which delayed field operations. Since the end of July, production has consistently increased and October production averaged more than 46,000 boepd. Improved weather conditions have allowed us to accelerate our drilling schedule and, with 11 drilling rigs now operating, it is anticipated that an additional 25 net wells will be drilled in the remainder of 2011. With an additional 52 net wells expected to be brought on stream by year-end, we now forecast 2011 exit production rates in excess of 49,000 boepd.
I'm updating my forecast model and will post it under the Sweet 16 tab this afternoon.
PetroBakken - Sharp increase in production
PetroBakken - Sharp increase in production
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PetroBakken - Sharp increase in production
Bakken Business Unit Update
Bakken production was 8% higher in the third quarter of 2011 compared to the second quarter of 2011, as shut-in production was restored after an unusually long spring break-up (in a typical year, field activity resumes in mid-May). Despite the drilling program commencing later than expected, shorter cycle times and additional rigs allowed us to accelerate our drilling. In addition, we reduced our inventory of wells that were on production but unfrac'd to 8 (6.5 net) from 14 (13.7 net) at the end of the second quarter. Since the end of the third quarter, we have drilled 13 (8.9 net) wells, completed 18 (13.9 net) wells, and brought 13 (9.1 net) wells on production. This activity has resulted in production of more than 21,500 boepd (based on field estimates) at the beginning of November.
We continue to see evidence that the new CleanTech(TM) completion technique that we adopted in certain areas of the Bakken play has improved initial oil rates and lowered water cuts. This has provided us with the opportunity to extend the economic limits of the Bakken drilling fairway.
We are re-completing our injector well in our first natural gas Enhanced Oil Recovery ("EOR") pilot, providing for more uniform natural gas injection along the length of the horizontal wellbore. We expect to begin natural gas flooding in our next pilot prior to year-end. This pilot is designed to test an injection configuration applicable to both single leg and bilateral horizontal wells. Our third injector well is currently on primary production, and we expect to drill two additional wells in 2012. As previously indicated, it is our intention to place all injector wells on primary production prior to commencing injection.
Cardium Business Unit Update
Production for the Cardium Business Unit averaged 11,275 boepd in the third quarter, representing an increase of 21% over the second quarter of 2011, due to shut-in production being restored and an active capital program throughout the quarter. Spring break-up for this business unit is typically longer than the Bakken, and the program completed during the quarter was in-line with our original plans. Since the end of the third quarter we have drilled an additional 16 (10.7 net) wells, completed 8 (6.4 net) wells and brought 25 (17.7 net) wells on production, resulting in production of over 15,750 boepd (based on field estimates) in early November.
Results from the Cardium play continue to meet or exceed our expectations. All of our Cardium areas are generating strong economic returns, and recent wells in West Pembina, Garrington and Lochend (where we have approximately 75% of our acreage) are typically exceeding our type curve. Although we have seen increases in the cost of certain drilling and completion services, the impact has been attenuated through improved execution efficiencies and reduced cycle times.
We have now drilled 176 (132.1 net) horizontal wells since the summer of 2010 and have an inventory of over 650 net remaining locations as we continue to prove up and add to our acreage.
OTHER ACTIVITY
Our activity in the southeast Saskatchewan conventional Mississippian plays increased significantly from the second quarter. One of the two planned facility upgrades to handle increased water production has been completed, providing for an additional 425 boepd of production from existing wells and also an opportunity for increased drilling activity in both our Bakken and conventional Mississippian plays. The second facility upgrade is expected to be completed in 2012.
In our Alberta/BC Business Unit, we continue to evaluate our lands in northeast British Columbia and Alberta. Earlier this year we drilled two Montney wells at Monias in northeast British Columbia to retain our mineral rights and further develop this acreage. The first of these Montney wells has been producing since the beginning of the second quarter while the second well came on-stream in October. We also control 120,000 net acres in emerging oil resource plays in Alberta, and have now drilled three wells to begin evaluating these lands, with a fourth well to commence drilling prior to year-end.
Bakken production was 8% higher in the third quarter of 2011 compared to the second quarter of 2011, as shut-in production was restored after an unusually long spring break-up (in a typical year, field activity resumes in mid-May). Despite the drilling program commencing later than expected, shorter cycle times and additional rigs allowed us to accelerate our drilling. In addition, we reduced our inventory of wells that were on production but unfrac'd to 8 (6.5 net) from 14 (13.7 net) at the end of the second quarter. Since the end of the third quarter, we have drilled 13 (8.9 net) wells, completed 18 (13.9 net) wells, and brought 13 (9.1 net) wells on production. This activity has resulted in production of more than 21,500 boepd (based on field estimates) at the beginning of November.
We continue to see evidence that the new CleanTech(TM) completion technique that we adopted in certain areas of the Bakken play has improved initial oil rates and lowered water cuts. This has provided us with the opportunity to extend the economic limits of the Bakken drilling fairway.
We are re-completing our injector well in our first natural gas Enhanced Oil Recovery ("EOR") pilot, providing for more uniform natural gas injection along the length of the horizontal wellbore. We expect to begin natural gas flooding in our next pilot prior to year-end. This pilot is designed to test an injection configuration applicable to both single leg and bilateral horizontal wells. Our third injector well is currently on primary production, and we expect to drill two additional wells in 2012. As previously indicated, it is our intention to place all injector wells on primary production prior to commencing injection.
Cardium Business Unit Update
Production for the Cardium Business Unit averaged 11,275 boepd in the third quarter, representing an increase of 21% over the second quarter of 2011, due to shut-in production being restored and an active capital program throughout the quarter. Spring break-up for this business unit is typically longer than the Bakken, and the program completed during the quarter was in-line with our original plans. Since the end of the third quarter we have drilled an additional 16 (10.7 net) wells, completed 8 (6.4 net) wells and brought 25 (17.7 net) wells on production, resulting in production of over 15,750 boepd (based on field estimates) in early November.
Results from the Cardium play continue to meet or exceed our expectations. All of our Cardium areas are generating strong economic returns, and recent wells in West Pembina, Garrington and Lochend (where we have approximately 75% of our acreage) are typically exceeding our type curve. Although we have seen increases in the cost of certain drilling and completion services, the impact has been attenuated through improved execution efficiencies and reduced cycle times.
We have now drilled 176 (132.1 net) horizontal wells since the summer of 2010 and have an inventory of over 650 net remaining locations as we continue to prove up and add to our acreage.
OTHER ACTIVITY
Our activity in the southeast Saskatchewan conventional Mississippian plays increased significantly from the second quarter. One of the two planned facility upgrades to handle increased water production has been completed, providing for an additional 425 boepd of production from existing wells and also an opportunity for increased drilling activity in both our Bakken and conventional Mississippian plays. The second facility upgrade is expected to be completed in 2012.
In our Alberta/BC Business Unit, we continue to evaluate our lands in northeast British Columbia and Alberta. Earlier this year we drilled two Montney wells at Monias in northeast British Columbia to retain our mineral rights and further develop this acreage. The first of these Montney wells has been producing since the beginning of the second quarter while the second well came on-stream in October. We also control 120,000 net acres in emerging oil resource plays in Alberta, and have now drilled three wells to begin evaluating these lands, with a fourth well to commence drilling prior to year-end.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PetroBakken - Sharp increase in production
PetroBakken generated $152.4 million (Cdn) cash flow from operations in the 3rd quarter. Based on their increased production guidance and increased oil prices, the company should generate over $197 million (Cdn) cash flow from operations in the 4th quarter.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group