February 3, 2015, Calgary, Alberta – Manitok Energy Inc. (the "Corporation" or "Manitok") (TSX-V: MEI) is providing an operations and corporate update.
Operations Update
Cordel-Stolberg
Manitok concluded 2014 by successfully completing the drilling and production test of two Cardium light oil wells. The two wells are 103/13-21-42-15W5 (33% working interest) and 13-11-42-15W5 (30% working interest). This completes a 15 well (6.8 net) drilling program in Cordel-Stolberg for 2014. The 13-11-42-15W5 well which targeted the backlimb of the Cardium structure tested at 333 bbls/d (100 bbls/d net) and 150 mcf/d (45 mcf/d net) over 1.9 days for a combined rate of 358 boe/d (108 boe/d net). The well produces 44° API oil and was tied-in and placed on production on December 23, 2014.
The 103/13-21-42-15W5 well which targeted the forelimb of the Cardium structure tested at 109 bbls/d (36 bbls/d net) and 99 mcf/d (33 mcf/d net) over 2.1 days for a combined rate of 126 boe/d (41 boe/d net). The well produces 52° API oil and was tied-in and placed on production on December 9, 2014.
Manitok also tied-in the 5-14-42-15W5 well (30% working interest) on December 23, 2014, which was drilled and completed during the first week of November 2014. This well tested at 337 boe/d (101 boe/d net) comprised of 313 bbls/d (94 bbls/d net) of 41° API oil and 142 mcf/d (43 mcf/d net) of natural gas over a 12 hour period.
Optimization of the recently added production is anticipated to continue during the first quarter of 2015.
2014 Entice Drilling Program
During 2014, Manitok successfully drilled 14 wells with a 100% working interest, (4 vertical and 10 horizontal) in the Entice area, fulfilling its 2014 capital commitment to PrairieSky Royalty Ltd. Manitok spent approximately $34.1 million on drilling and completions in Entice in 2014 exceeding the 2014 capital commitment by about $12.1 million. The $12.1 million will be carried forward and applied to the 2015 capital commitment of $33.0 million, resulting in a net 2015 drilling commitment of approximately $20.9 million.
Manitok targeted horizontal drilling locations with multi-stage fracturing completions. Manitok successfully drilled, completed and tested four horizontal wells in the Lithic Glauconitic ("Glauc") formation and five horizontal wells in the Basal Quartz ("BQ") formation. The tenth well was completed and tested in January 2015. Test results from five of the nine wells drilled, completed and tested in 2014 were previously press released and tested at an aggregate rate of 977 bbls/d of oil and 8.6 Mmcf/d of natural gas for a combined rate of about 2,400 boe/d. The five remaining wells drilled, completed and tested in 2014 are the 14-33-22-25W4, 6-28-22-25W4, 2-9-23-25W4 5-21-25-24W4, and 14-20-25-24W4 wells.
Carseland (South Entice)
The 14-33-22-25W4 well targeted the middle BQ. It offsets the 3-28-22-25W4 middle BQ well which tested at 135 bbls/d of oil and 420 mcf/d of natural gas for a total rate of 205 boe/d as previously press released. The 14-33 well flowed for 3.2 days and averaged 152 bbls/d of 28° API oil and 3.2 Mmcf/d natural gas to total 688 boe/d. As a result of the success of 14-33-22-25W4 and 3-28-22-25W4 middle BQ wells, Manitok has identified an additional 20 middle BQ drilling locations using well control and its seismic interpretation.
The 6-28-22-25W4 Lithic Glauc well was drilled and completed in December 2014. The well was completed with a 15 stage fracture stimulation and swab tested for 3.8 days. The average oil rate was 15 bbls/day of 39.6° API oil and the reservoir quality was poor throughout the wellbore.
During December 2014 Manitok successfully drilled the 2-9-23-25W4 middle BQ well, which offsets the successful 3-9-23-25W5 lower BQ well (tested at 177 bbls/d of oil and 1.14 Mmcf/d natural gas for a combined rate of 367 boe/d). During a 7.8 day production test in January 2015, the 2-9-23-25W4 well averaged 19 bbls/d of 32° API oil and 1.0 Mmcf/d of natural gas for a combined rate of 181 boe/d.
Strathmore (Central Entice)
The 5-21-25-24W4 well targeted the Glauc formation. The well was drilled and completed with a 15 stage fracture stimulation in November 2014. Due to a mechanical problem encountered during the completion, only 5 stages (about 300 metres of reservoir intersection in the wellbore) of the 15 stage fracture stimulation (1,030 metres of reservoir intersection) are contributing to the well's current production. During a 2.25 day production test, the well averaged 78 bbls/d of 32° API oil and 74 mcf/d natural gas for a combined rate of 90 boe/d with contribution from only 33% of the intersected reservoir within the wellbore, or 5 of the 15 fracture stages contributing to the test. This is consistent with management's expectations for a commercial Glauc reservoir. This is the second Glauc pool that Manitok has successfully discovered and tested, while the first was discovered over the summer of 2014 at Carseland.
The 14-20-25-24W4 well targeted the upper BQ and is located in the Strathmore field. While drilling the horizontal section, the wellbore began sloughing when it encountered unconsolidated sand. This resulted in only about 125 metres of productive zone in the wellbore. The well was completed with a 5 stage fracture stimulation and swab tested for 2.4 days. The well averaged 28 bbls/d of 26.5° API oil and 101 mcf/d natural gas for a combined rate of 45 boe/d. Considering the typical horizontal well will encounter 600 to 1,000 additional metres of reservoir, or five to eight times greater wellbore exposure to the reservoir, the result is encouraging in regards to the potential production capability of a more typical horizontal well in this reservoir. Based on seismic interpretation and well control, Manitok has identified four additional upper BQ drilling locations in this pool.
Entice Potential
The 5-21-25-24W4 well provides further technical support for the potential productivity of the Glauc formation over the Corporation's large Entice block. With further analysis of its 3D seismic, using the new data from recent drilling, Manitok has been refining its seismic interpretation over its prospective Glauc pools discovered in Carseland and Strathmore, as well as other Glauc pools identified in the Beiseker area (Northern Entice). The Corporation's work to date has identified 20 Glauc locations in Carseland offsetting the two successful Glauc wells drilled in mid-2014, which tested over 1,500 boe/d (600 bbls/d of oil) combined, an additional six Glauc locations in the Strathmore pool, and potentially two to three new pool tests in the Beiseker area.
The 2014 Entice drilling program was successful in proving the concept that the large oil in place, tight sand reservoirs of the lower Mannville formation are capable of commercial production. Of the 10 horizontal wells, seven wells were successful with test rates that support the potential for commercial production, two wells were hampered with mechanical issues or reservoir sloughing, but were able to establish potential production from those reservoirs and one well was unsuccessful. Manitok discovered five new lower Mannville pools (two Glauc and three BQ) capable of commercial production. Based on Manitok's seismic interpretation, geological mapping, historic well control, and drilling results to date, the Corporation's potential horizontal drilling inventory has increased to 26 Glauc locations in two pools and 40 BQ locations in three pools. Manitok has also identified four to five possible new pools (two to three lithic Glauc and two BQ), using the Corporation's newly refined seismic information and well control, that it will test over 2015 and 2016.
Facilities Construction
Facility work at the Cordel-Stolberg area is complete. All wells drilled in 2014 were tied-in and placed on production by December 23, 2014.
In Entice, within the Carseland area, Manitok constructed a battery with 2,000 bbls/d of fluid capacity which can be expanded to 5,000 bbls/d with a minimal amount of capital and satellite system centering on section 32-22-25W4. Oil will be treated at the battery and trucked to nearby sales points. The associated natural gas at the battery was tied into a third party processing facility in late December 2014. One satellite has been tied into the main battery. A second satellite is awaiting final pipeline approval and is anticipated to be tied-in shortly after such approval is received. The battery is located on the same lease as its two most prolific wells 15-32-22-25W4 and 16-32-22-25W4. The two wells have been on production since late December 2014 producing at rates up to 1,100 boe/d (410 bbls/d of light oil) while being severely restricted using downhole chokes. The two wells have averaged about 600 boe/d (240 bbls/d light oil and condensate) during January 2015, which is well below their productive capability, due to a liquids processing issue at the third party gas plant. As production volumes were increased, the high liquids levels in the associated gas (about 20 bbls/Mmcf of condensate alone) from the two wells overwhelmed the third party's facility, which was designed for about 5 bbls/Mmcf of condensate. Both the operator of the third party gas plant and Manitok are working on a solution to handle the significant level of condensate produced by the two wells. Manitok is reviewing several alternatives to extract a greater amount of the condensate at the Corporation's main battery while working with the third party operator to increase their liquids handling capability at the gas plant. The third party operator has been very cooperative in discussing solutions and Manitok anticipates the implementation of these solutions later in the first quarter of 2015.
The satellite that is tied-in includes two BQ wells and one Glauc well, which tested at a combined total of 900 boe/d (302 bbls/d oil). Manitok will bring these wells on production in early February 2015 and move production up to the level that the third party facilities can handle. Manitok anticipates that the associated gas from the BQ oil will have less condensate and therefore may produce greater volumes before the same condensate issues arise. Manitok anticipates being able to produce between 500 boe/d (185 bbls/d oil) and 750 boe/d (275 bbls/d oil) while the liquids handling issue is being resolved. Once resolved, the third party gas plant has about 7 Mmcf/d (1,162 boe/d of gas only) of capacity which will allow Manitok to produce the five wells from the two leases at or near their initial capabilities. Once production naturally declines, the second satellite is anticipated to be tied-in and the remaining two BQ wells, with combined test rates of about 545 boe/d (196 bbls/d of oil), to be brought on production in the second quarter of 2015.
Corporate Update
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