looks decent for thr future.....cheers, dave.
TriOil Resources Provides Operational Update
CALGARY, Oct. 9, 2012 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company" - TSXV:TOL) is pleased to provide a third quarter operational update.
Production and 2012 Guidance
Current production based on field estimates exceeds 2,500 boe/d (80% oil and NGL's). The Company's current productive capability (current production plus completed wells in the process of being brought on stream) exceeds 2,900 boe/d (80% oil and NGL's), with an additional 3 (1.9 net) wells waiting on completion and 5 (3.4) net additional wells planned in the fourth quarter. TriOil remains on track to meet its 2012 exit production target of 3,400-3,600 boe/d (80% oil and NGL's).
Drilling results have met or exceeded expectations, however, unseasonably wet field conditions at Kaybob during the first half of the third quarter coupled with off-line production at Lochend due to pipeline installation activity and the start-up of the TriOil operated Lochend gas plant expansion have resulted in slightly lower than anticipated third quarter average production. As a result, we expect 2012 annual average production at the lower end of the Company's 2,300-2,500 boe/d forecast.
Lochend Cardium Operations
The Company's Lochend Cardium program continues to deliver strong results and steadily improving capital efficiencies. To date TriOil has implemented 11 slick water stimulations in the Central/Western Cardium trend with an average IP30 of 328 boe/d (80% oil).
TriOil continues to optimize drilling techniques and completion designs. Our last 7 horizontal wells have all been drilled monobore with invert mud systems. Drilling times have been reduced by an average of 4 days. TriOil recently implemented hybrid fracs on 2 Lochend area wells with encouraging early results and plan to apply these modified frac designs to future development drilling operations within the pool.
TriOil successfully participated in the drilling of the first long-reach horizontal oil well (over 2,800 meters open in the Cardium "A") in the Lochend region (TOL 50%) and completed the well with a 40 stage hybrid frac during the third quarter. After milling out the ball seats/sand blockages in the heel of the wellbore the well tested at an average of approximately 730 boe/d (630 bopd) over an 8 day production test period. The operator plans to bring the well on production in late October and produce the well for a few months to determine productivity from the milled out heel section of the horizontal leg, prior to drilling out the toe section and bringing the entire wellbore on production. We are encouraged by the early results of this well and plan to drill 2 additional long-reach horizontal wells in the first half of 2013.
With the effective utilization of multi-well pads, monobore drilling technologies, hybrid frac designs and long reach horizontals at Lochend, we expect that production rates, recoveries and capital efficiencies will continue to improve.
In the third quarter of this year, TriOil drilled 4 (2.4 net) horizontal oil wells at Lochend and successfully completed all 4 wells. Three (2.0 net) of these wells were drilled on the higher productivity Central/Western Lochend Cardium trend and 1 (0.4 net) well was drilled on the Eastern Lochend Cardium trend. The first well (TriOil 50%) averaged 275 boe/d (80% oil) over its initial 30 calendar days of production and is currently producing at 330 boe/d (60% oil) in its second month. The second well (TriOil 40%) was completed with a hybrid frac and is the best well drilled to date on the Eastern Lochend Cardium trend, averaging 250 boe/d (96% oil) over its initial 23 calendar days of production. The remaining 2 (1.5 net) wells, including our first long-reach horizontal oil well, are both located in Central/Western Lochend and are expected to commence production late October. TriOil plans to drill 2(1.2 net) additional horizontal oil wells at Lochend in the fourth quarter of this year.
TriOil acquired an additional 14 sections of Crown land on the Central/Western Lochend trend at a recent Alberta land sale, increasing our land position 96 (70 net) sections on the Lochend Cardium light oil resource play. Our current Lochend drilling inventory stands at 150 (97 net) horizontal development locations, which does not include any locations on the newly acquired Southern Lochend landblock. There is potential to add an additional 80 net locations to our drilling inventory with successful step-out drilling along the Cardium trend.
We recently completed a 15 mmcf/d expansion of the TriOil Lochend gas plant (TOL operated; TOL 51%) to 20 mmcf/d and expect to commission the new facilities in mid-October. The expanded facilities will allow a number of shut-in or constrained Cardium wells to come on stream and will accommodate TriOil and industry Cardium gas volumes at Lochend for the foreseeable future. We also expect that the new facilities will improve our NGL recoveries and drive lower operating costs for TriOil.
Kaybob Operational Update
The Kaybob Dunvegan light oil play has contributed significant new production and reserves since TriOil's first well on the play in late 2011. Our first 10 horizontal Dunvegan oil wells have delivered average IP30 rates of 318 boe/d (80% oil and NGL's), and we are pleased to announce the most recent well (TOL 25%) achieved an IP30 of 326 boe/d (60% oil) during the third quarter.
Although field activities were hampered by unseasonably heavy rainfall in July and August, TriOil has been very active in the field over the last few months. We recently brought 3 (2.1 net) oil wells on production and have 4 (2.9 net) wells waiting on completion/production operations. TriOil plans to drill 2 (1.5 net) additional horizontal oil wells at Kaybob in the fourth quarter of this year.
Recent Financing and 2012 Capital Program
TriOil closed a $28 million bought deal financing on October 4, 2012, issuing 7,845,000 common shares at a price of $2.55 per share and 2,917,288 flow-through common shares at a price of $3.00 per share. Our 2012 Capital Budget has been increased by $17.5 million to $117.5 million to provide for the recent South Lochend land acquisition.
Crude Oil Hedging
TriOil maintains an active crude oil hedging program in order to stabilize average realized sales prices and protect the Company's forecast cash flow and planned capital program. During the third quarter we layered in additional Canadian dollar denominated fixed priced oil swaps for 2012 and 2013. In aggregate, the Company has now hedged 900 bbls/d of crude oil with a fixed weighted average price of $97.94 Canadian per bbl for 2012 and 800 bbls/d of crude oil with a fixed weighted average price of $101.93 Canadian per bbl for 2013.
Outlook
With a growing cash flow and production base as we near our 3,500 boe/d 2012 exit target, a very healthy balance sheet, a significant drilling inventory and operational presence in two high netback light oil resource plays, evolving technical improvements to our drilling and completion programs, steadily improving capital efficiencies and decreasing operating costs, TriOil has established a strong growth platform for 2013 and beyond.