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CALGARY, Dec. 18, 2013 /CNW/ - Palliser Oil & Gas Corporation ("Palliser" or the "Company") (TSX VENTURE: PXL) would like to provide an operations update.
Fourth quarter 2013 average production is anticipated to be approximately 2,000 boe per day, down 14% from volumes reported in the prior quarter. For 2013, average production is now forecasted at approximately 2,330 boe per day, representing a 4% downward revision from the previous forecast.
Palliser previously provided operational updates which noted that water breakthrough has been experienced in a number of CHOPS wells in the Manitou area and that production declines have outpaced additions from the capital spending program. The new Manitou salt water disposal facility was commissioned in late November, with high volume lift ramp up of these wells commencing in December. It is forecasted that the recovery of oil production from the affected wells at Manitou will be realized through the first quarter of 2014. In the Edam area, the Company has experienced higher water cuts in a select number of high oil rate producers which have recovered a significant percentage of the original oil in place, resulting in production losses of approximately 200 barrels per day as compared to the third quarter of 2013. The Company has reacted to this development by expanding its salt water disposal take away capacity and producing those specific wells at higher total fluid rates. More recently, the Company re-completed new uphole zones in two wells. These recent operations are forecasted to result in production recoveries through the first quarter of 2014.
Due to these lower production volumes, operating costs for the fourth quarter are forecasted to be higher on a per unit basis. When combined with the realized wider heavy oil differentials, the Company is now forecasting funds flow from operating activities of approximately $2 million for the fourth quarter of 2013. Capital expenditures for the fourth quarter are estimated to be $6 million, resulting in forecast year-end net debt of approximately $46 million.
The fourth quarter capital program is now complete; however, winter weather caused some delays in bringing the remaining 2013 projects on production. Results from the Company's total 2013 capital program appear to be in line with previous years, with 18 wells being drilled, reactivated and re-entered for production with 100% success. Production from these projects is forecasted to contribute to corporate production growth during the first quarter of 2014.
The Company anticipates providing an operations update in conjunction with releasing its 2014 capital budget on or before January 31, 2014.