THE FACTS
SCSZF has not included in its production
1) 230 boepd
"The Company suspended approximately 80 boe/d of production of low netback natural gas weighted production in the second and third quarters and does not expect to re-start this production until natural gas prices recover further. In addition, the Company had 150 boe/d of oil weighted production curtailed in the quarter due to maximum rate limitations on wells located in Judy Creek in the Beaverhill Lake and Pekisko formations. The Company expects these curtailments to ease over the next 12 months as the Company expands its Pekisko waterflood and further develops its Beaverhill Lake pool."
2) The new wells which were tied into the system in the beginning of Q4.
"At the end of the quarter, Second Wave had 3.0 gross (1.2 net) wells waiting to be tied in or completed. Subsequent to the quarter end 2.0 gross (0.8 net) of those wells were tied in and placed on production, leaving an inventory of 1.0 gross (0.4 net) well currently standing waiting on completion operations."
3) The ongoing electrification and pipelines network which has been constructed and will offer significant cost reductions effective Q4.
"The Company continues to work on improving its operating cost structure in Judy Creek as it progresses with pipeline connecting its sales oil production and electrifying its Judy Creek oil field. The Company expects that its Judy Creek oil production will be pipeline connected by the end of the first quarter of 2013 and that approximately one-third of its oil field will be electrified at the end of the third quarter of 2012 with an additional one-third of the field expected to be electrified by the end of the first quarter of 2013. Pipeline connecting the Company's oil production in Judy Creek is expected to significantly reduce its trucking, transportation and processing costs which exceeded $7.50 per boe on its Beaverhill Lake production in the second quarter. Electrification of the oil field is expected to yield incremental reductions in per unit operating expense by facilitating increased run time and reduced maintenance, although less significant in scale than the pipeline connection."
4) The beggining of the waterflood operations in Q4 which have given great results (100%+ production) for all the other companies thus far like Crescent, Pinecrest, Legacy if you read the respective Q3 reports.
5) The new lowered cost per BHL well as the company notes in Q3. the company owns 40% WI so its cost per well is now at just $2M. The current FFO gives it minimum 10 NEW wells per year.
6) The fact that SCSZF owns the SWEET SPOT of BHL with IP that exceed even 2,000 boepd and hit 5,000 boepd ! the recent Q3 says it all along with this below....and it is still at the beginning as they have drilled only 16 locations out of 90 !
"In the second quarter of 2012 the Company and its partners have continued to successfully delineate its Beaverhill Lake land base in Judy Creek. Recent test results at its 05-13-063-10W5, 06-17-063-09W5 and 02-21-063-09W5 wells have on average exceeded our internal type curve on our east land base by approximately a factor of two. The magnitude of these successful tests have continued to re-confirm a substantial Beaverhill Lake light oil drilling inventory on the Company's land block in Judy Creek. In addition as with most resource developments the Company and its partners have effectively been able to optimize its type curves and capital efficiency's as the Beaverhill Lake play progress from an exploration stage to a development stage."
"The Beaverhill Lake and Pekisko formations in Judy Creek combined represent a total unrisked drilling inventory exceeding 700 net wells. Corporate production rates in May have reached record levels of approximately 3,500 boe/d (80% oil and natural gas liquids) based on field estimates and recent test results in the Company's southeast land block have exceeded expectations with field estimated peak daily gross rates ranging from 2,400 to 5,400 boe/d and ten-day average gross test rates estimated at 1,000 boe/d."