CALGARY, March 6, 2013 /CNW/ - Athabasca Oil Corporation (TSX: ATH) is
pleased to provide an update of its light oil operations in the Fox
Creek area of the Alberta Deep Basin.
In December 2012, the Light Oil Division achieved its goal with
production rates of greater than 10,000 barrels of oil equivalent per
day (boe/d) comprised of approximately 50 percent oil and condensate.
Daily oil and gas production ramped up during Q4 2012, as the Company
constructed and commissioned its wholly-owned infrastructure with a
capacity of 36,000 barrels per day (bbl/d) and 48 million cubic feet
per day (mmcf/d) of natural gas.
In October 2012, Athabasca commissioned a 63-kilometre-long,
12-inch-diameter trunk pipeline with a capacity of up to 180 mmcf/d.
The Kaybob West Battery was commissioned in October 2012, followed by
the Kaybob East and Saxon/Placid batteries in mid-December 2012.
In 2012, the Company drilled 46 horizontal wells targeting stacked
unconventional reservoirs in the Duvernay, Montney and Nordegg
formations — by the start of January, 44 wells had been completed and
33 were on production, including Athabasca's first three horizontal
Duvernay wells.
Athabasca is particularly encouraged by the strong initial performance
of its three Duvernay wells — in particular, the 2-34-62-20W5M well
produced about 50,000 barrels of 55°-plus API liquids and 0.2 billion
cubic feet of gas during its first 80 days of production. Producing at
a restricted flow in February, the 2-34 well averaged 840 boe/d
(63-percent liquids) at a flowing surface pressure greater than 20
megaPascals gauge (mPag). Athabasca intends to capture the premium
value of the produced condensate as a sales product.
"As one of the largest Duvernay land holders in the Deep Basin where the
company owns 340,000 acres of high-graded Duvernay rights, Athabasca is
excited about the results from its three horizontal wells, drilled and
completed to date," said Sveinung Svarte, chief executive officer.
"Athabasca is also pleased to see other positive industry test results
in the Duvernay. These results, along with recent industry
transactions, support Athabasca's view of the strong value of the
Duvernay play."
During the first half of 2013, Athabasca will monitor production and
decline rates of the horizontal wells, establishing type curves by
formation (Duvernay, Montney and Nordegg) and by area. The type curves
will be used to create a development plan to produce these stacked
unconventional reservoirs.
Athabasca's Kaybob acreage lies in the heart of the Duvernay Fairway
where the Company holds 200,000 acres (net) with greater than 20 metres
of Duvernay pay. Athabasca has high-graded more than 2,000 drilling
locations (targeting the stacked Duvernay and Montney formations) to
develop the Kaybob and Saxon/Placid areas.
At December 31, 2012, Athabasca's Fox Creek area well inventory included
22 horizontal wells (completed with multi-stage hydraulic fracturing)
awaiting tie-in and seven horizontal wells awaiting multi-stage
completions.
Athabasca's Q1 2013 winter development drilling program involved
contracting six rigs to drill 16 horizontal wells targeting the
liquids-rich Montney Formation. During Q2 2013, Athabasca intends to
drill four additional horizontal wells targeting the Montney.
In late February 2013, Athabasca completed construction, ahead of
schedule and below budget, of a 35-kilometre-long, 8-inch-diametre dual
pipeline interconnect between the Kaybob East and Kaybob West
batteries. The interconnect represents the final step in configuring
the Company's wholly-owned infrastructure at Fox Creek.
During January and February 2013, production averaged between 7,500 and
8,000 boe/d comprised of greater than 50 percent oil and condensate.
The reduction in production rates, from those reported in December
2012, is related to throughput capacity constraints in a third-party
high pressure sour gas transmission line in the Kaybob East area. Once
the pipeline interconnect from Kaybob East to Kaybob West is
commissioned, Athabasca can bypass this third-party bottleneck by
switching to its wholly-owned infrastructure, adding 2,500 to 3,000
boe/d of curtailed production to come to market.
"The recent third-party pipeline capacity constraint has demonstrated
the importance of the Company's decision to build and control our own
light oil gathering and production facilities, enabling us to optimize
production rates and operational costs," said Sveinung Svarte. "As
production ramps up, Athabasca will deliver incremental, low cost
reserves and improved finding and development costs."
Building upon a successful Q4 2012 and Q1 2013, Athabasca is poised to
increase its light oil production. The Company confirms that it is
tracking its mid-year guidance of 11,000 to 13,000 boe/d comprised of
approximately 50 percent oil and condensate.
About Athabasca Oil Corporation
Athabasca is a dynamic, Canadian company focused on the development of
oil resource plays in Alberta, Canada. The Company has accumulated an
extensive, high quality resource base suitable for the extraction of
thermal crude oil (bitumen) and light oil. Well financed and well
endowed with quality assets and talented people, Athabasca is poised to
become a major Canadian oil producer. It aspires to produce more than
200,000 boe/d by 2020, comprised of a 50/50 weighting of thermal and
light oil. Athabasca is traded on the TSX under the symbol "ATH."
Reader Advisory:
This News Release contains forward-looking information that involves
various risks, uncertainties and other factors. All information other
than statements of historical fact is forward-looking information. The
use of any of the words "anticipate", "plan", "continue", "estimate",
"expect", "may", "will", "project", "should", "believe", "predict",
"pursue" and "potential" and similar expressions are intended to
identify forward-looking information. The forward-looking information
is not historical fact, but rather is based on the Company's current
plans, objectives, goals, strategies, estimates, assumptions and
projections about the Company's industry, business and future financial
results. This information involves known and unknown risks,
uncertainties and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking
information. No assurance can be given that these expectations will
prove to be correct and such forward-looking information included in
this News Release should not be unduly relied upon. This information
speaks only as of the date of this News Release. In particular, this
News Release may contain forward-looking information pertaining to the
following: the Company's capital expenditure programs; the Company's
drilling plans; the Company's plans for, and results of, exploration
and development activities; the Company's estimated future commitments;
the Company's business plans for, and development of, the Company's
Light Oil Division business; timing of facilities construction and
production; targeted exit production rates by the end of the second
quarter of 2013 and beyond and long term production goals; selection of
and effectiveness of drilling rigs and equipment; Athabasca's plans
with respect to the Light Oil Divisions assets and the expected
benefits to be received by Athabasca from such assets; expectations
regarding the Company's Light Oil Division development areas including
anticipated production levels and timing of receipt of significant
revenues and operating results therefrom.
With respect to forward-looking information contained in this News
Release, assumptions have been made regarding, among other things: the
Company's ability to obtain qualified staff and equipment in a timely
and cost-efficient manner; the regulatory framework governing
royalties, taxes and environmental matters in the jurisdictions in
which the Company conducts and will conduct its business; the
applicability of technologies for the recovery and production of the
Company's reserves and resources, including the use of multi-stage
fracture and other stimulation technologies; future capital
expenditures to be made by the Company; future sources of funding for
the Company's capital programs; the Company's future debt levels;
geological and engineering estimates in respect of the Company's
reserves and resources; the geography of the areas in which the Company
is conducting exploration and development activities; the impact that
the agreements relating to the PetroChina Transaction (the "PetroChina
Transaction Agreements") will have on the Company, including on the
Company's financial condition and results of operations; and the
Company's ability to obtain financing on acceptable terms.
Actual results could differ materially from those anticipated in this
forward-looking information as a result of the risk factors set forth
in the Company's most recent Annual Information Form filed on March 27,
2012 ("AIF") that is available on SEDAR at www.sedar.com, including,
but not limited to: fluctuations in market prices for crude oil and
natural gas; general economic, market and business conditions;
dependence on Phoenix Energy Holdings Limited (" Phoenix") as the joint
venture participant in the Dover oil sands project; variations in
foreign exchange and interest rates; factors affecting potential
profitability; factors affecting funding, including the development of
new business opportunities, the availability of financing, developments
in technology, the priorities of the Company and of its current and
future joint venture partners and general economic conditions;
uncertainties inherent in estimating quantities of reserves and
resources; the potential impact of the exercise of the Dover put/call
options on the Company; failure to meet the conditions precedent to the
exercise by the Company of the Dover put option; failure to receive
regulatory approval for the Dover project when anticipated or at all;
failure to obtain necessary regulatory approvals for completion of the
Dover put/call option transaction, if any; failure to meet development
schedules and potential cost overruns; increases in operating costs
making projects uneconomic; the potential for adverse consequences in
the event that the Company defaults under certain of the PetroChina
Transaction Agreements; defaults under certain debt agreements;
environmental risks and hazards and the cost of compliance with
environmental regulations; failure to obtain or retain key personnel;
the substantial capital requirements of the Company's projects; the
need to obtain regulatory approvals and maintain compliance with
regulatory requirements; changes to royalty regimes; political risks;
failure to accurately estimate abandonment and reclamation costs; risks
inherent in the Company's operations, including those related to
exploration, development and production of oil sands, crude oil and
natural gas reserves and resources, including the production of crude
oil and natural gas using multi-stage fracture and other stimulation
technologies; the potential for management estimates and assumptions to
be inaccurate; reliance on third party infrastructure for project
facilities; failure by counterparties (including without limitation
Phoenix) to comply with contractual arrangements between the Company
and such counterparties; the potential lack of available drilling
equipment and limitations on access to the Company's assets; Aboriginal
claims; seasonality; hedging risks; insurance risks; claims made in
respect of the Company's operations, properties or assets; the
potential for adverse consequences as a result of the change of control
provisions in the PetroChina Transaction Agreements and in certain debt
agreements; competition for, among other things, capital, the
acquisition of reserves and resources, export pipeline capacity and
skilled personnel; the failure of the Company or the holder of certain
licenses or leases to meet specific requirements of such licenses or
leases; risk of reassessments of the Company's tax filings by taxation
authorities; risks arising from future acquisition and joint venture
activities; volatility in the market price of the common shares; and
the effect that the issuance of additional securities by the Company
could have on the market price of the common shares. The
forward-looking statements included in this News Release are expressly
qualified by this cautionary statement. Athabasca does not undertake
any obligation to publicly update or revise any forward-looking
statements except as required by applicable securities laws.
Oil and Gas Information:
"BOEs" may be misleading, particularly if used in isolation. A BOE
conversion ratio of six thousand cubic feet of natural gas to one
barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy
equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.
SOURCE: Athabasca Oil Corporation
