CALGARY, June 8, 2011 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company") is pleased to provide an operational update on the Company's light oil project in the Cardium at Lochend and announces a non-core property disposition/swap transaction and an expansion of its credit facilities.
Slick Water Completions Delivering Solid Results in the Cardium at Lochend
In the first quarter of 2011, TriOil initiated a new high density slick water completion program designed to improve reservoir breakdown, provide more effective fractures deeper into the resevoir, improve production performance and reserve capture, and reduce costs. Based on the results of our first micro-seismic frac study and production performance from the initial 3 wells in our 2011 program, we believe the new multi-stage frac design is meeting our objectives and we are excited about our upcoming development program.
The first horizontal oil well in our 2011 program (TriOil 40% working interest) was completed with a 20 stage slick water frac in Q1. The IP 30 rate (average gross boe's produced in the initial 30 days) on this well was previously announced at 164 boe/d. The well has continued to perform above type curve during its second month of production, averaging 165 boe/d and yielding an IP 60 rate of 164 boe/d comprised of 85% light oil (39 degree API) and 15% associated solution gas. TriOil owns 30-50% working interests in several potential horizontal development locations offsetting this well.
The second horizontal oil well in our 2011 program (TriOil 47.5% working interest) was completed with a 20 stage slick water frac in Q1. The IP 30 rate on this well was previously announced at 190 boe/d. This well is performing above type curve, averaging 199 boe/d during its second month of production and yielding an IP 60 rate of 194 boe/d comprised of 90% light oil (39 degree API) and 10% associated solution gas. TriOil owns 50-55% working interests in a number of potential horizontal development locations offsetting this well.
The third horizontal oil well in our 2011 program (TriOil 78% working interest) was completed with a 20 stage slick water frac in the second quarter. The well averaged 124 boe/d during its initial 30 days of production comprised of 85% oil (39 degree API oil) and 15% associated solution gas. This rate is slightly below our type curve at this stage and we are currently assessing optimization alternatives. TriOil owns 78-100% working interests in a number of potential horizontal development locations offsetting this well.
The associated natural gas from the above three wells is anticipated to be tied into TriOil's 99 percent owned gas facility in the second half of 2011.
Average production from the first 3 Cardium horizontal wells in our 2011 program is at or above our current type curves for the Lochend area on an IP 30 and IP 60 basis. Management is encouraged by the performance of the higher density slick water fracs and by the stability of production profiles.
Upcoming Lochend Cardium Activity
The fourth horizontal well in our 2011 program (TriOil 30% working interest) was successfully drilled during the second quarter and is scheduled for a 20 stage slick water completion later this month.
We are currently constructing a multi-well surface pad at 13-18 (TriOil 95% working interest) and expect to commence drilling the fifth well in our 2011 horizontal light oil program prior to the end of June.
The Company has a rig under contract and we expect to drill an additional 7 or 8 operated horizontal wells at Lochend with this rig prior to year-end. In addition to our operated horizontal drilling program, we are budgeting for 2 to 4 non-operated horizontal wells at Lochend in the second half of 2011.
In the north east portion of our Lochend property, TriOil owns and operates approximately 30 vertical wellbores, originally producing from the deeper Cardium conglomerate, that provide vertical completion opportunities overlying the pre-existing Cardium fairway. We are planning 2 completions in existing vertical wellbores within the next 2 to 4 week period, both designed for high volume 100 tonne single stage fracs. Assuming the vertical completions meet our mid-case targets in the 50 boe/d range, we plan to execute 4 to 6 additional 100 tonne single stage Cardium completions in the second half of 2011. This vertical completion program offers the potential to add meaningful oil production and reserves on a cost effective basis and also serves to de-risk large areas of our Lochend land base for future Cardium horizontal light oil development.
Non-Core Asset Disposition
Based on the recent success of our light oil project at Lochend and consistent with our ongoing non-core property disposition strategy, TriOil has entered into an agreement to sell its minor interests in the Coronation area of eastern Alberta. The property is currently producing approximately 60 boe/d and at year-end 2010 had total proved reserves of approximately 74 mboe and proved plus probable reserves of approximately 91.8 mboe.
As consideration for the sale, TriOil will receive $2.6 million cash and approximately 2.0 net sections of Cardium rights in the Company's core Lochend property. Upon closing of this sale/swap transaction in late June, TriOil will increase its net acreage position in a number of sections that are slated for horizontal drilling and vertical completions in the Company's 2011 capital program and being considered for TriOil's 2012 capital program. This strategic sale/swap transaction increases the Company's operational focus on its emerging light oil project at Lochend, adds prospective Cardium rights at Lochend and provides additional financial strength and flexibility.
Strong Balance Sheet
TriOil continues to maintain a strong balance sheet, exiting Q1 2011 with an estimated working capital surplus of approximately $1.5 million and an undrawn credit facility.
TriOil's credit facilities have been increased to a total of $33 million with the recent addition of an $8 million development facility.
With the increased credit facility of $33 million and the expected $2.6 million proceeds from the Coronation non-core asset sale, TriOil is in a strong financial position to execute its 2011 light oil focused capital program at Lochend.
First Quarter Results
TriOil plans to release its First Quarter financial and operating results on June 27, 2011.
TriOil is a publicly traded junior oil resource player in Western Canada. Substantial land positions have been acquired on early stage light oil resource opportunities to capitalize on improvements in horizontal drilling and multi-stage fracture stimulation technologies, specifically targeting opportunities in the emerging Cardium oil trends in Alberta and the Bakken and Sanish oil trends in southeast Saskatchewan. TriOil has successfully executed its business plan in its first year of operations and has positioned the Company for solid growth in production, reserves and shareholder value.
TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of June 7, 2011, there were approximately 31.3 million shares issued and outstanding (34.6 million fully diluted).