Peerless production exceeds estimatesGood news from Peerless Energy. Their 07 exit production was 5600bbd, a thousand barrels above their highest previous guidance. 100 percent success rate and successful frac program. Now you know why we are taking these guys out.
PEERLESS ENERGY INC. PROVIDES 2007 PRODUCTION EXIT RATE, OPERATIONAL, CAPITAL
AND CORPORATE DEBT UPDATE
Peerless Energy Inc. is providing information on its 2007 exit
production, an operational update relating to recent Saskatchewan
Bakken light oil development drilling activity and a capital spending
update.
2007 exit production
As a result of better than
anticipated results in its Freestone Bakken drilling program and an
increase to the company's 2007 capital budget, Peerless exceeded its
previously stated 2007 production exit guidance. The company's current
production is in excess of 5,600 barrels of oil equivalent per day,
comprising approximately 75 per cent light oil and liquids, and 25 per
cent natural gas.
2007 EXIT PRODUCTION (BOE/D)
Previous guidance Actual
4,200 - 4,600 5,600
Operations
In 2007, Peerless drilled 32 (26.3
net) wells targeting Bakken light oil with a 100-per-cent success rate.
All but one (one net) were on production at year-end. These wells
comprise nine (7.8 net) unstimulated, pitchfork, trilateral horizontals
and 23 (18.5 net) single-leg horizontal wells.
Peerless increased
its fourth quarter well count to 13 (12 net) Bakken wells from 10 (nine
net). The company also fracture stimulated one (one net) of its
existing pitchfork trilaterals during the third week of October, 2007.
The operation was successful, resulting in 18 (16.6 net) additional
recompletion operations to add to its inventory.
Capital spending and corporate debt
With
the addition of three previously unbudgeted Bakken wells in the fourth
quarter, the company spent in excess of $31-million, bringing capital
expenditures for 2007 to approximately $72-million, compared with
previous guidance of $64-million. Included in this fourth quarter
capital total is $22.0-million for drilling, completion and equipment,
$2.8-million for acquisitions, and $3.2-million for seismic.
It is estimated that the company exited 2007 with a debt and working capital deficiency of approximately $61-million.
The
Bakken light oil drilling program has led to an increase in the
company's light oil weighting, which in turn has grown the company's
current corporate operating netback to greater than $50 per barrel of
oil equivalent, based on $90 (U.S.) WTI and $6.25 AECO pricing. This
shigher netback has allowed Peerless to increase its 2007 budget, while
maintaining a balance sheet with a current ratio of net debt to
annualized one-month trailing cash flow of less than 0.8.
Petrobank plan of arrangement
On
Nov. 22, 2007, Peerless announced in Stockwatch that the company had
entered into a plan of arrangement with Petrobank Energy and Resources
Ltd., whereby Petrobank will acquire all of the issued and outstanding
shares of Peerless.
Pursuant to the arrangement, Petrobank will acquire:
- All
of the outstanding Class A common shares for 90 cents in cash and 0.08
of a common share of Petrobank per Class A common share;
- All of the outstanding Class B common shares for $10 in cash per each Class B common share.
On
Dec. 21, 2007, Peerless announced in Stockwatch that it had obtained an
interim order of the Court of Queen's Bench of Alberta, providing for,
among other things, the holding of a meeting of the shareholders of
Peerless to approve the arrangement.
A special meeting of the
holders of Class A common shares and Class B common shares of Peerless
will be held in respect of the arrangement in the Angus Northcote room,
at the Bow Valley Conference Center, Suite 300, 205, 5 Ave. S.W.,
Calgary, Alta., on Jan. 25, 2008, at 10 a.m. (Calgary time).
Peerless
has mailed a management information circular and proxy statement, with
respect to the meeting, to the Peerless shareholders. The information
circular and proxy statement are available for viewing electronically
under Peerless's profile on SEDAR.
The completion of the
arrangement is subject to certain conditions, including the receipt of
the approval of the Peerless shareholders, the final approval of the
Court of Queen's Bench of Alberta and all applicable regulatory
authorities. If all necessary approvals are obtained and the conditions
to the completion of the arrangement are satisfied or waived, Peerless
anticipates that the arrangement will become effective on or about Jan.
28, 2008.
Tristone Capital Inc. has provided the board of
directors of Peerless with a written opinion that, as of Dec. 19, 2007,
it is of the opinion that the consideration to be received by the
Peerless shareholders, under the arrangement, is fair, from a financial
point of view, to the Peerless shareholders.
The board of
directors has unanimously determined that the arrangement is in the
best interests of Peerless and its shareholders. The directors and
officers of Peerless have entered into lock-up agreements with
Petrobank to vote their Peerless shares in support of the arrangement.
We seek Safe Harbor.