|By Marketwired .||
|January 17, 2014 05:00 AM EST||
CALGARY, ALBERTA -- (Marketwired) -- 01/17/14 -- Strategic Oil & Gas Ltd. ("Strategic" or the "Company") (TSX VENTURE: SOG) provides an operational update as well as 2014 guidance.
MUSKEG STACK RESULTS
Strategic has had continued drilling success with its fourth quarter drilling program which included two horizontal Muskeg Stack wells and one horizontal Keg River well.
-- Muskeg Stack horizontal well (15-24) has averaged 220 BOED (92% oil) over the first 31 days while still cleaning up; the well is currently producing 240 BOED. -- Muskeg Stack horizontal well (5-33) drilled in December 2013 and completed early in January flowed up the 114.3 mm frac string post fracture stimulation at rates in excess of 400 BOED (95% oil) during the first four days of production, and is still cleaning up. The well is expected to be equipped and tied in shortly.
The Company is pleased with the recent results and encouraged by the production history on the existing wells. Strategic successfully drilled six Muskeg Stack horizontal wells during 2013. The six Muskeg Stack wells have delineated 35 sections of land, and have produced oil in commercial quantities. Strategic has de-risked an inventory of over 100 Muskeg Stack horizontal wells directly offsetting current production on the north western portion of the rim at Marlowe.
Results from the Muskeg drilling program are summarized in the table below:
---------------------------------------------------------------------------- Horizontal Cumulative Length Production Producing IP30 Current Rate Well (meters) (BOE) Days (BOED) (BOED) ---------------------------------------------------------------------------- 400 (95% 5-33 (Q4 2013) 1,506 1,200 4 - oil) ---------------------------------------------------------------------------- 240 (92% 15-24 (Q4 2013) 1,204 5,885 31 220 oil) ---------------------------------------------------------------------------- 130 (90% 16-29 (Q3 2013) 1,461 5,400 72 175 oil) ---------------------------------------------------------------------------- 190 (90% 4-33 (Q3 2013) 1,538 17,800 75 400 oil) ---------------------------------------------------------------------------- 240 (50% 14-13 (Q2 2013) 875 35,750 136 340 oil) ---------------------------------------------------------------------------- 120 (65% 13-28 (Q2 2013) 905 34,600 190 335 oil) ----------------------------------------------------------------------------
KEG RIVER HORIZONTAL
The Keg River horizontal well, the first of its kind in Marlowe, has been on production for over a month with an IP30 of 110 BOED (97% oil) and is currently producing 85 BOED (97% oil). This short well (with an open-hole section of 400 m) was drilled to evaluate a tighter upper Keg River structure. The upper Keg pool has a lower permeability compared to the more prolific lower Keg River pool. The upper pool, with a thickness of approximately 25 meters and average porosity of 4%, is ideally suited for a horizontal well development program.
Strategic is planning an 800 m long Keg River horizontal in early 2014, which would be acid stimulated. The Keg River pool has been internally mapped with 8 -10 MMbbl of original oil in the section of land around the Old Marlowe structure.
Strategic conducted post drill out operations on four of the Muskeg horizontal wells drilled during the third and fourth quarters of 2013. This program was necessary to identify whether or not drill outs would enhance production from the wells prior to embarking on a major development campaign. The drill out program indicated that the original completion operation was effective in stimulating the formation and that this would not be required on future locations. Drilling fluid lost in the wellbores during the drill out operations caused some damage in the fractures resulting in reduced oil rates from the wells during the fourth quarter of 2013. This damage was short-lived and the wells have cleaned up over the past 4 weeks and are producing close to the pre-drill oil rates. The Muskeg Stack horizontal wells now contribute approximately 25% of the company's production capability which positions the Company for a major exploitation program yielding significant growth opportunity.
Production at Steen River was constrained for 26 days at Marlowe during the fourth quarter. The Steen plant was down 19 days for the expansion and the Company experienced additional 7 days downtime with the facilities during the month of November due to new equipment commissioning which has since been resolved. As a result of the operational issues experienced over the past quarter, production volumes have been affected. Strategic's corporate production is estimated to average 2,800 BOED for the fourth quarter of 2013. Strategic estimates 2013 annual average production of 3,200 Boed (70% oil) and year end net debt of $79 MM.
Strategic exited 2013 with a production capability of 4,600 Boed, while still awaiting completion of the 5-33 well. The Muskeg Stack horizontal well 5-33 has been producing into a test facility at a rate of 400 BOED. The well is expected to be tied in shortly. Due to the ongoing Bistcho pipeline project, Strategic has approximately 500 BOED of production shut in at West Marlowe. Further, the company plans to shut-in 1,000 BOED from Larne, Bistcho and Cameron Hills for 2 weeks during the Bistcho plant turnaround in February. Downtime during the first quarter of 2014 would result in average corporate production of 3,700 BOED.
With the plant expansion completed and the sales oil pipeline project on schedule, Strategic expects to have all production on stream in the second quarter of 2014.
Strategic's Board of Directors has approved a capital spending budget of $80 million for 2014 with a focus on Muskeg Stack horizontal wells at Marlowe and related infrastructure. Strategic has completed the 5-33 Muskeg horizontal well which was drilled in 2013 and plans to drill an additional 13 wells in 2014.
Capital spending will be allocated as follows
-- Drill, complete, equip & tie-ins: $54 million -- Workovers/recompletions: $4 million -- Land, seismic, facility expenditures & plant turnarounds: $8 million -- Bistcho oil pipeline: $14 million
The scope of the Bistcho pipeline project has been slightly expanded to include two additional sales oil pumps to provide redundancy as well as an additional 3 miles of 6 inch emulsion line required to alleviate production constraints in the West Marlowe field as additional Muskeg wells will be drilled during 2014.
Annual average production volumes are expected to be 4,400-4600 Boed (70% oil), a 40% increase from 2013 levels. Using realized prices of CDN$81/bbl for oil including hedging and CDN$3.70/mcf for natural gas, Strategic expects a cash flow of $35-40 million for 2014, which represents an increase of over 100% from projected 2013 cash flows. The 2014 capital budget will be funded by a combination of cash flow from operations, drawings on the company's credit facility and other financing sources, as required. Strategic is currently evaluating several financing alternatives.
During 2014, Strategic will spend approximately 90% of the total capital program (excluding the pipeline project) on drilling, completions and workover-related activities. The drilling budget will focus primarily on Muskeg Stack development, as well as new seismic-defined Keg River targets to capture additional upside. The construction of the Bistcho pipeline is the focus of the Company's non-drilling capital expenditures. Strategic believes completion of this pipeline to the Rainbow system is pivotal to the growth and profitability of the Company and will save between $3.00-$4.00/boe on transportation related expenses once completed.
As the Company's exploitation of the Marlowe Muskeg Stack resource play becomes increasingly focused on both geophysical analysis and operational efficiency, the Company also announced that in order to better utilize the skills and experience of its senior management, Sean Hayes will now lead the technical exploration and development team as Executive Vice-President Geoscience and Cody Smith will assume the role of Chief Operating Officer.
Dr. Hayes has been the Chief Operating Officer of the Company since 2009. Strategic will now benefit from his years of experience in subsurface reservoir modeling and characterization as the asset portfolio has now grown and subsurface work becomes increasingly important to the success of the Muskeg Stack play.
Mr. Smith joined the Company as Vice President, Operations in 2012. Mr. Smith had worked the previous 25 years of his professional career with EnCana Corporation. Mr. Smith led teams in drilling, completions, facilities, production engineering and operations and safety in British Columbia and Alberta. He was involved during new play development in the Jean Marie, Horn River, Montney, Alberta Cretaceous stacked plays, and Duvernay.
Although delayed, the Company has achieved great results despite numerous hurdles. The past year proved up the immense size of the Muskeg Stack resource. Strategic is now beginning to experience reduction in drill to rig release times, more effective wellbore placement, improved production per stage and faster on stream cycle times.
The largest challenge the Company has experienced is down time due to various plant, transportation and weather related issues. With the Bistcho pipeline project ongoing throughout the first quarter of 2014, Strategic is setting conservative 2014 guidance and has modelled 25% downtime for the first quarter and 10% downtime for subsequent quarters. With the new facility being operational, future down times are expected to be minimal however the Company is cautiously approaching the next phase of development until the major pipeline connection project into the Rainbow system is completed.
The Company has climbed a steep learning curve while discovering a new play in the Western Canadian Sedimentary Basin. Strategic's confidence in the immense resource is illustrated by the investment in the expansion and upgrading of the 9-17 oil facility at Marlowe which is expected to handle the immediate production growth. Future focus remains on driving capital efficiencies and reducing downtime to ensure stable production and cash flows.
Strategic is a junior oil and gas company committed to growth by exploiting its light oil assets in Canada. Strategic's common shares trade on the TSX Venture Exchange under the symbol SOG.
This news release includes certain information, with management's assessment of Strategic's future plans and operations, and contains forward-looking statements which may include some or all of the following: (i) anticipated production rates; (ii) expected results of capital programs; (iii) expected timelines for production optimization; (iv) net debt levels; (v) anticipated operating costs; and (vi) expected capital projects and associated spending; which are provided to allow investors to better understand the Company's business. By their nature, forward-looking statements are subject to numerous risks and uncertainties; some of which are beyond Strategic's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, changes in environmental tax and royalty legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, and other risks and uncertainties described under the heading 'Risk Factors' and elsewhere in the Company's Annual Information Form for the year ended December 31, 2012 and other documents filed with Canadian provincial securities authorities and are available to the public at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The principal assumptions Strategic has made includes security of land interests; drilling cost stability; finance and debt markets continuing to be receptive to financing the Company, the ability of the Company to monetize non-core assets and industry standard rates of geologic and operational success. Actual results could differ materially from those expressed in, or implied by, these forward-looking statements. Strategic disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Original Oil In Place ("OOIP") are as per the COGEH Guidelines and are not reserves. There is no certainty that it will be commercially viable to produce any portion of OOIP except to the extent they are subsequently classified as proved or probable reserves.
Basis of Presentation
The discussion and analysis of Strategic's oil and natural gas production and related performance measures is presented on a working-interest, before royalties basis. For the purpose of calculating unit information, the Company's production and reserves are reported in barrels of oil equivalent (Boe). Boe may be misleading, particularly if used in isolation. A Boe conversion ratio for natural gas of 6 Mcf: 1 Boe has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Strategic Oil & Gas Ltd.
Gurpreet Sawhney, MBA, MSc., PEng.
President and CEO
1100, 645 7th Avenue SW Calgary, AB T2P 4G8
Strategic Oil & Gas Ltd.
Michael A. Zuk
VP Business Development
1100, 645 7th Avenue SW Calgary, AB T2P 4G8
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions with...
Jan. 19, 2017 10:00 AM EST Reads: 5,523
"What is the next step in the evolution of IoT systems? The answer is data, information, which is a radical shift from assets, from things to input for decision making," stated Michael Minkevich, VP of Technology Services at Luxoft, in this SYS-CON.tv interview at @ThingsExpo, held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
Jan. 19, 2017 10:00 AM EST Reads: 5,540
“DevOps is really about the business. The business is under pressure today, competitively in the marketplace to respond to the expectations of the customer. The business is driving IT and the problem is that IT isn't responding fast enough," explained Mark Levy, Senior Product Marketing Manager at Serena Software, in this SYS-CON.tv interview at DevOps Summit, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Jan. 19, 2017 09:30 AM EST Reads: 11,274
WebRTC sits at the intersection between VoIP and the Web. As such, it poses some interesting challenges for those developing services on top of it, but also for those who need to test and monitor these services. In his session at WebRTC Summit, Tsahi Levent-Levi, co-founder of testRTC, reviewed the various challenges posed by WebRTC when it comes to testing and monitoring and on ways to overcome them.
Jan. 19, 2017 09:30 AM EST Reads: 6,004
DevOps tends to focus on the relationship between Dev and Ops, putting an emphasis on the ops and application infrastructure. But that’s changing with microservices architectures. In her session at DevOps Summit, Lori MacVittie, Evangelist for F5 Networks, will focus on how microservices are changing the underlying architectures needed to scale, secure and deliver applications based on highly distributed (micro) services and why that means an expansion into “the network” for DevOps.
Jan. 19, 2017 08:30 AM EST Reads: 5,155
The speed of software changes in growing and large scale rapid-paced DevOps environments presents a challenge for continuous testing. Many organizations struggle to get this right. Practices that work for small scale continuous testing may not be sufficient as the requirements grow. In his session at DevOps Summit, Marc Hornbeek, Sr. Solutions Architect of DevOps continuous test solutions at Spirent Communications, explained the best practices of continuous testing at high scale, which is rele...
Jan. 19, 2017 07:45 AM EST Reads: 4,247
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed ...
Jan. 19, 2017 07:45 AM EST Reads: 6,325
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
Jan. 19, 2017 07:30 AM EST Reads: 3,625
Providing the needed data for application development and testing is a huge headache for most organizations. The problems are often the same across companies - speed, quality, cost, and control. Provisioning data can take days or weeks, every time a refresh is required. Using dummy data leads to quality problems. Creating physical copies of large data sets and sending them to distributed teams of developers eats up expensive storage and bandwidth resources. And, all of these copies proliferating...
Jan. 19, 2017 07:15 AM EST Reads: 3,833
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and Containers together help companies to achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of D...
Jan. 19, 2017 07:00 AM EST Reads: 5,037
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, discussed the best practices that will ensure a successful smart city journey.
Jan. 19, 2017 07:00 AM EST Reads: 2,001
Every successful software product evolves from an idea to an enterprise system. Notably, the same way is passed by the product owner's company. In his session at 20th Cloud Expo, Oleg Lola, CEO of MobiDev, will provide a generalized overview of the evolution of a software product, the product owner, the needs that arise at various stages of this process, and the value brought by a software development partner to the product owner as a response to these needs.
Jan. 19, 2017 07:00 AM EST Reads: 1,207
Hardware virtualization and cloud computing allowed us to increase resource utilization and increase our flexibility to respond to business demand. Docker Containers are the next quantum leap - Are they?! Databases always represented an additional set of challenges unique to running workloads requiring a maximum of I/O, network, CPU resources combined with data locality.
Jan. 19, 2017 06:45 AM EST Reads: 473
"We provide DevOps solutions. We also partner with some key players in the DevOps space and we use the technology that we partner with to engineer custom solutions for different organizations," stated Himanshu Chhetri, CTO of Addteq, in this SYS-CON.tv interview at DevOps at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jan. 19, 2017 06:45 AM EST Reads: 4,266
@ThingsExpo has been named the ‘Top WebRTC Influencer' by iTrend. iTrend processes millions of conversations, tweets, interactions, news articles, press releases, blog posts - and extract meaning form them and analyzes mobile and desktop software platforms used to communicate, various metadata (such as geo location), and automation tools. In overall placement, @ThingsExpo ranked as the number one ‘WebRTC Influencer' followed by @DevOpsSummit at 55th.
Jan. 19, 2017 06:00 AM EST Reads: 4,755