VRO 100 % fourth quarter drilling success, operatiVRO 100 % fourth quarter drilling success, operations and Cardium oil update
Headline: Vero Energy Inc. announces 100 % fourth quarter drilling success, operations and Cardium oil update
Symbol: VRO
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CALGARY, Jan. 14 /CNW/ - Vero Energy Inc. (TSX - VRO, "Vero" or the "Company") is pleased to report drilling and operating results for the fourth quarter of 2009. During this quarter, Vero participated in the drilling of 8 (6.4 net) horizontal wells with a drilling success rate of 100%. The Company also performed 3 (1.5 net) successful recompletions on standing vertical wells.
This drilling program enabled the Company to add significant production at the end of the fourth quarter, exiting at an estimated 7,800 boed (82% natural gas) net of a disposition of approximately 350 boed in the quarter. With a number of well completions at year end and into early January, current production based on field estimates is 8,200 boed (80% natural gas). At this time, the Company has over 1,500 boed of restricted production capacity while shut-in production due to higher costs is now minimal at 150 boed.
The Company is very pleased with the initial results of its Cardium light oil play. In the quarter, the Company drilled two Cardium horizontal oil wells. The Company's first Cardium well (67% working interest) was drilled into a conglomerate and was brought on pump December 29th with initial rates of approximately 300 boed (95% oil). The well was optimized over a ten day period and was producing at a rate of over 530 boed (94% oil) before frac sand caused the pump to seize. The well has since been cleaned out and is back on pump with optimization ongoing. The second well (100% working interest) was drilled for Cardium sand in West Pembina. This well flowed over 1,500 bbls/d of oil during the first three days recovering all completion fluids subsequent to its January 7th multi-stage frac. Over the past two days, the well has flowed light formation oil at an average rate of 650 bbls/day. The well will be changed over to production tubing and a pump. We estimate that this well will have production rates when on pump of approximately 300 bbls/day, following the typical production profiles as presented by industry. A close vertical offset to this second well, based on public data, had an initial rate of 50 bbls/day recovering 70 mboe, thus supporting our productivity expectations. Follow up locations are currently being evaluated.
Vero holds approximately 148 gross (95 net) sections of lands that are on trend for Cardium production with over ninety percent of this land believed to be oil prone. The Company believes that 40 sections are potentially prospective at this time. Ultimately, the lands will require reduced spacing, and this will be determined by: recovery per well, commodity price, capital and overall cash cost structures (including royalties).
Other operations in the fourth quarter included the addition of a compression facility in Brazeau to reduce restricted production. Following is a breakdown of our fourth quarter horizontal drilling program. Three (2.1 net) Notikewan wells, 1 (1.0 net) Bluesky well, 1 (0.69 net) Rock Creek well, 2 (1.67 net) Cardium oil wells, and 1 (1.0 net) Cardium gas well. The Company has spent a significant amount of time improving and optimizing its completions with results that are exceeding our expectations. The following summarizes the tested open flow rates of horizontal gas wells drilled and on production since September that have adequate test and stabilized production information of greater than one month: three Notikewan wells at 7.6, 20.2, 3.2 mmcfed respectively and one Bluesky well at 14.1 mmcfed. The Notikewan wells are currently producing respectively at stabilized rates of 4.7, 7.3, 2.0 mmcfed and 5.3 mmcfed for the Bluesky well. The remaining wells are still early in the testing and production stage but are initially meeting all of our economic type curves. The majority of the new wells are restricted. The three recompletions have set up several new horizontal locations.
Vero currently has three operated drilling rigs running and expects to drill 9-10 (7.3-8.3 net) horizontal wells in the first quarter of 2010, including 4 (3.0 net) Cardium oil wells, 2 (2.0 net) Bluesky wells, 1 (1.0 net) Wilrich well, 1 (1.0 net) Rock Creek well and 1 (0.3 net) Notikewan well.
Vero previously provided first quarter guidance and with current production rates and the updated drilling program, the Company expects average production to increase to 8,200-8,500 boed with quarter exit guidance of approximately 9,000 boed. The Company will provide updated guidance for the remainder of the year prior to the end of the first quarter. The Company does expect to drill between 22 and 30 horizontal wells in 2010. The capital program will remain flexible and will depend on the commodity price environment. The Company has a truly diverse portfolio of scalable, concentrated, repeatable and low risk resource projects on its lands as demonstrated by its drilling success in the fourth quarter and planned first quarter drilling programs. Vero has added the ability to divert its capital to oil projects as well. Of the current 2010 locations, 10-12 horizontal wells are being planned for Cardium oil, with options to scale up based on the evolution of the play and on commodity prices. The remaining capital can be allocated to high graded, liquids rich, natural gas plays which have high rates of return. The Company has over 160 horizontal locations, not including the Cardium oil play. Vero believes the potential of the Cardium could be very significant based on the Company's land base, reduced spacing and industry results to date.
Vero Energy Inc. is a publicly traded Canadian energy company involved in the exploration, development and production of oil, natural gas and liquids in Alberta. The Company's shares trade on The Toronto Stock Exchange under the symbol "VRO". Vero's latest presentation will be available on our website on January 18, 2010.