Nice!Pinecrest Energy Inc. announces intention to commence Normal Course Issuer Bid and provides operational update
7 minutes ago - ACQUIREMEDIA
TSX Venture Exchange:Â PRY
CALGARY, June 5, 2013 /CNW/ - Pinecrest Energy Inc. ("Pinecrest" or the "Company") announces that subject to the TSX Venture Exchange ("TSXV") approval, Pinecrest intends to commence a Normal Course Issuer Bid (the "Bid") to purchase, from time to time, as it considers advisable, up to 19,559,679 common shares (which is equal to 10% of the "public float") on the open market through the facilities of the TSXV. Cormark Securities Inc. has been engaged to conduct the Bid on behalf of Pinecrest. The price that Pinecrest will pay for any common shares under the Bid will be the prevailing market price on the TSXV at the time of purchase. Common Shares acquired under the Bid will be subsequently cancelled.
The Bid will commence upon the receipt of approval from the TSXV and will terminate one year from such date or such earlier date as the Bid is completed or terminated at the option of Pinecrest.
The Company believes that the purchase of its shares at recent market prices is an appropriate use of available cash, as management believes recent market prices of its shares do not fully reflect the underlying value of its assets and business, and that, at such times, the purchase of common shares for cancellation will increase the proportionate interest of, and be advantageous to, all remaining shareholders.
To the knowledge of the Company, no director or senior officer of the Company currently intends to sell any common shares into the Bid.
WATERFLOOD UPDATE
The Company's second waterflood scheme (Evi Project #2) has now been on continuous injection for approximately six months. Initial results continue to meet performance expectations with oil production from offsetting wells exhibiting a definite correlation to the rate of water injection. Initially, water was injected at a high rate in order to demonstrate the potential for a quick response. Since achieving this objective, injection rates have been reduced in order to better manage the long term recovery of the project. In April, one of the offset wells producing 100 bopd went down due to a mechanical failure (parted rods) and remained shut-in for 27 days because of road bans during spring break-up. This well has subsequently been placed back on production and is currently producing 106 bopd.  Based on primary recovery (no waterflood) and natural declines, the producing wells in this scheme would be projected to produce approximately 54 bopd. Currently, this scheme is producing approximately 165 bopd which represents a three-fold increase over primary production. This is consistent with analog waterflood schemes in the immediate greater Red Earth area.
The Company's third waterflood scheme (Loon Project #1) has been on injection since March 21, 2013. This scheme consists of one horizontal water injection well and a combination of offsetting horizontal and vertical producing wells. Since start-up, the Company has been managing water injection at or near two times voidage replacement and, although very early (just over two months from start of injection), the closest well to the injector (a vertical well) is exhibiting an increase in oil production rates of three to five times. The Company is very excited to see this early response and, while we recognize that patience is required when determining the efficacy of secondary recovery schemes, it is anticipated that similar responses on the balance of the offsetting wells will be observed in the coming months.
The focus of the Company remains firmly fixed on the implementation of its seven operated 2013 waterflood schemes. Results to date from the Company's first three waterflood projects have very been positive. Two additional projects are now ready to be commissioned and injection on these two schemes will begin early in the third quarter. Water injection on the final three projects located in the Evi field is scheduled to commence at the end of the third quarter of 2013.
OPERATIONS
Pinecrest has budgeted to commence its second half capital expenditures in July. The Company has, over the past three months, undertaken a thorough review of all of the horizontal wells drilled into the Slave Point utilizing in-house expertise, a recognized reservoir engineering consultant (distinguished SPE author) and a proprietary industry fracturing database specific to the Slave Point in the greater Red Earth area (which includes both Pinecrest's cemented and open-hole completions as well as the rest of industry). We are extremely excited with the findings of our review; in particular the superior well performance of open-hole packer completions as compared to the cemented liner/monobore technique and the subsequent increased profitability. Please refer to the updated presentation on the Company's website at www.pinecrestenergy.com for further detail.
Current production levels have been affected by normal seasonal access limitations to wellsites as a result of spring break-up. This affects wells where produced fluids are trucked and also wells that require repairs and maintenance. Consequently, we have experienced a seasonably-normal 10-12% production down time. Productive capability (all wells on without any downtime due to mechanical or access issues) is over 4,000 boepd. Production for the second quarter of 2013 will average between 3,600 and 3,900 boepd, but will be dependent on weather and access.
CORPORATE INFORMATION
Pinecrest Energy Inc. is a Calgary, Alberta based company engaged in the exploration, development, and production of petroleum and natural gas. Pinecrest has approximately 217.7 million common shares issued and outstanding (258.5 million fully diluted). The common shares of Pinecrest trade on the TSX Venture Exchange under the symbol PRY.