Cequence Announces Expanded Ansell Project and Production of 12,000 boepd
CALGARY, Jan. 21, 2014 /CNW/ - Cequence Energy Ltd. ("Cequence" or the
"Company") (TSX: CQE) is pleased to announce expansion of its project at
Ansell and production of 12,000 boepd.
Cequence is pleased to announce the initial success of the Company's Wilrich
drilling program at Ansell and the addition of key lands increasing its total
landholdings to 46.5 gross sections. The most recent Wilrich well was drilled
at 14-19 (49 % working interest) and tested at 2,500 boepd, and has produced
for 60 days at an average restricted rate of 960 boepd. Two Ansell wells have
been completed to date and are ahead of the Company's model expectation.
Current net production in the Ansell area is approximately 650 boepd and is
restricted by production facilities. One additional Wilrich well was drilled
in the first quarter and is awaiting completion and two additional horizontal
wells are currently drilling.
The first quarter capital program at Ansell is expected to include six wells
(3 net) and the construction of gathering and compression facilities to
increase production capacity to approximately 40 mmcf/day. Five of the six
wells are scheduled to be 'earning wells' where Cequence pays 15% of the
capital cost to retain a 49% working interest with the sixth well scheduled to
be drilled at the Company's 49% working interest.
Drilling to date at Ansell has identified the Notikewin and Falher formations
as prospective secondary targets on Cequence acreage. Cequence's partner is
shooting a 135 square kilometer 3D seismic program to both focus the Wilrich
drilling program and image these additional potential targets. With the recent
addition of contiguous and highly prospective lands, continued drilling
success by Cequence and other operators in the area, the acquisition of 3D
data and construction of the gathering system, Ansell is considered a new core
area by the Company. Pending results from the initial wells and the ongoing
plans of the Company's partner in the area, Cequence may direct additional
capital to this area in 2014 to drill additional Wilrich wells and add
In the fourth quarter of 2013, Cequence completed a 65% working interest
Dunvegan well at 5-2. The well was recently put on production at restricted
gross production rates of 10.0 mmcf/d of natural gas and 300 bbls/day of free
condensate. The 5-2 well is a follow-up to the Company's 10-2 well that has
produced 2.5 bcf since commencing production in February 2013.
Montney development at Simonette is ongoing with three wells drilled in the
fourth quarter of 2013. The 10-24 well was recently brought on production at
restricted rates of 5.0 mmcf/d and 75 bbls/d of free condensate at flowing
casing pressure of 1,715 psi. The 10-24 well is located on a new padsite
located 1.5 miles from existing offset Montney development. The remaining two
Montney wells were drilled off the 7-29 padsite and experienced mechanical
difficulties on completion. Diagnostic tools were run on both wells and
Cequence is currently evaluating remediation plans. It is anticipated that
completions will be able to be performed on these wells. These two wells
offset Cequence's best liquids producers at 9-21 and 3-21.
A Montney exploration well at 16-10-61-01W6 is currently drilling and will be
the first test on the southwestern Montney acreage at Simonette which the
Company has a 100% working interest. Management believes the geologic data
observed from the open hole logs of the full Montney section is encouraging.
The well is expected to be completed in the first quarter of 2014. If
successful, management believes 16-10 would derisk Montney acreage on the
western portion of Simonette where the Company's reserves evaluators have not
previously assigned any Montney reserves or resources.
In addition, Cequence has drilled a Wilrich well at 13-30-61-26W5. The 13-30
well is a significant step out from the producing Wilrich wells at Simonette
in an area where the Company's reserves evaluators have not previously
assigned any Wilirch reserves. The 13-30 well is expected to be completed in
The Company currently has two operated rigs drilling at Simonette.
Based on field estimates, production for 2013 averaged 10,200 boepd (56 mmcfd
of gas and 1,500 bpd of liquids), which is slightly higher than the Company's
previously provided production guidance of 10,000 boepd for the year. The 2013
average production represents an increase of 13 percent above 2012 average
Based on field estimates, production recently reached 12,000 boepd with the
tie-in of the 5-2 Dunvegan well and the completion of our 10-24 Montney well,
both at Simonette, both of which wells are currently restricted. Cequence has
recently maximized field capacity at Simonette and Ansell. The 13-11
compression facility at Simonette is being expanded and capacity is expected
to reach 70 mmcf/d in early February. Cequence expects to complete an
additional 10 gross (7 net) wells in the first quarter of 2014.
Production from the 3-31 and 15-31 Montney wells completed in Q4 2013 have
each averaged 860 and 844 boepd (11% condensate), respectively, for the first
60 days of restricted production. Production from both wells is better than
the Company's model expectations. The 14-1 Montney well completed in Q4 has
produced at an average of 590 boepd (9% condensate) for the first 60 days.
This is slightly below the Company's Montney model expectation.
Cequence has now hedged approximately 50% of its 2014 forecast gas production
at an average gas price of Cdn $4.00 per mcf.
Cequence is a publicly traded Canadian energy company involved in the
acquisition, exploitation, exploration, development and production of natural
gas and crude oil in western Canada. Further information about Cequence may be
found in its continuous disclosure documents filed with Canadian securities
regulators at www.sedar.com.
Forward Looking Information
Certain information included in this press release constitutes forward-looking
information under applicable securities legislation. Such forward-looking
information is provided for the purpose of providing information about
management's current expectations and plans relating to the future. Readers
are cautioned that reliance on such information may not be appropriate for
other purposes, such as making investment decisions. Forward-looking
information typically contains statements with words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "propose", "project" or
similar words suggesting future outcomes or statements regarding an outlook.
Forward-looking information in this press release may include, but is not
limited to, information with respect to: business strategies; operational
decisions and the timing thereof, development, remediation and exploration
plans and the timing thereof, including the likelihood that wells will become
productive; future production rates and expected production volumes; the
number and quality of future potential drilling locations; capital
allocations; drilling plans; the derisking of Company acreage; and facility
development, expansion and future capabilities. Forward-looking information is
based on a number of factors and assumptions which have been used to develop
such information but which may prove to be incorrect. Although Cequence
believes that the expectations reflected in its forward-looking information is
reasonable, undue reliance should not be placed on forward-looking information
because Cequence cannot give assurance that such expectations will prove to be
correct. In addition to other factors and assumptions which may be identified
in this press release, assumptions have been made regarding and are implicit
in, among other things: cash flow projections and netbacks; anticipated
operating costs; bank debt levels; reserves; field production rates and
decline rates; the ability of Cequence to secure adequate product
transportation; the timely receipt of any required regulatory approvals; the
ability of Cequence to obtain qualified staff, equipment and services in a
timely and cost efficient manner to develop its business; Cequence's ability
to operate the properties in a safe, efficient and effective manner; the
ability of Cequence to obtain financing on acceptable terms; the ability to
replace and expand oil and natural gas reserves through acquisition,
development of exploration; the timing and costs of pipeline, storage and
facility construction and expansion; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters; and the ability of Cequence to
successfully market its oil and natural gas products. Readers are cautioned
that the foregoing list is not exhaustive of all factors and assumptions which
have been used.
Forward-looking information is based on current expectations, estimates and
projections that involve a number of risks and uncertainties which could cause
actual results to differ materially from those anticipated by Cequence and
described in the forward-looking information. The material risk factors
affecting Cequence and its business are contained in Cequence's Annual
Information Form which is available under Cequence's issuer profile on SEDAR
at www.sedar.com. The forward-looking information contained in this press
release is made as of the date hereof and Cequence undertakes no obligation to
update publicly or revise any forward-looking information, whether as a result
of new information, future events or otherwise, unless required by applicable
securities laws. The forward looking information contained in this press
release is expressly qualified by this cautionary statement.
BOEs are presented on the basis of one BOE for six Mcf of natural gas.
Disclosure provided herein in respect of BOEs may be misleading, particularly
if used in isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl is based on an
energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.
For the year ended December 31, 2013, the ratio between the average price of
West Texas Intermediate ("WTI") crude oil at Cushing and NYMEX natural gas was
approximately 27:1 ("Value Ratio"). The Value Ratio is obtained using the 2013
WTI average price of $97.97 (US$/Bbl) for crude oil and the 2013 NYMEX average
price of $3.67(US$/MMbtu) for natural gas. This Value Ratio is significantly
different from the energy equivalency ratio of 6:1 and using a 6:1 ratio would
be misleading as an indication of value.
A pressure transient analysis or well-test interpretation has not been carried
out on certain wells and thus certain of the test results provided herein
should be considered to be preliminary until such analysis or interpretation
has been completed. Readers are cautioned that the foregoing well test results
are not necessarily indicative of long-term performance or of ultimate
The Toronto Stock Exchange has neither approved nor disapproved the contents
of this press release.
SOURCE Cequence Energy Ltd.
Paul Wanklyn, Chief Executive Officer, (403)
218-8850,email@example.com David Gillis, Chief Financial Officer,
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CO: Cequence Energy Ltd.
-0- Jan/21/2014 22:07 GMT
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