CALGARY, ALBERTA--(Marketwired - Nov. 27, 2014) - Forent Energy Ltd. (TSX VENTURE:FEN) is pleased to provide an operational update and to announce that it has filed its Interim Financial Statements and MD&A for the three and nine months ended September 30, 2014, on SEDAR and its website.
Q3 2014 HIGHLIGHTS
- Third quarter production averaged 221 boe per day, an increase of 28% over the second quarter;
- Third quarter revenues, net of royalties, exceeded $1.0 million, an increase of 36% over the second quarter;
- Successfully drilled, completed and brought on production three wells in the Twining field;
- Realized oil pricing of $82.67 per bbl and natural gas pricing of $4.26 per mcf resulting in an average realized price of $60.06 per boe and an operating netback of $24.70 per boe; and
- Achieved the highest corporate production rates and revenue for the last four years.
FINANCIAL
Forent's revenues for the three months ended September 30, 2014 increased to $1.0 million and funds flow from operations increased to $111,000.
2014 capital spending during the third quarter and year-to-date was $1.2 million and $4.5 million respectively. The majority of the costs were to drill, complete and tie-in three wells at Twining, a workover at Wayne and mineral rights acquisitions.
Forent's net debt (calculated as current liabilities less current assets) at September 30, 2014, was $5.6 million compared with net debt of $1.9 million at the beginning of the year. The Company has access to a credit facility of $7.0 million (renewed in June 2014) of which $5.9 million was drawn at the end of Q3 2014.
PRODUCTION
Forent's oil and natural gas sales during Q3 2014 averaged 221 BOEd compared with 54 BOEd in Q3 2013. The 221 BOEd rate was also a 28% increase over the previous quarter's results of 172 BOEd (Q2). The increase from Q2 to Q3 2014 resulted from additional volumes from three new wells in the Twining field which started production midway through the quarter. For the nine month period, oil and gas sales averaged 193 BOEd vs 58 BOEd in the prior year period. As of the date of this report, the new wells have stabilized and the Company's total field production is approximately 250 BOEd.
OPERATIONS
Forent drilled three wells on the Twining field during the second quarter. During the third quarter the wells were completed and tied-in for production. Field optimization efforts were conducted on the new 05-26 well to seal off a lower interval that was producing excess water, resulting in significantly decreased water production and associated handling costs.
In the Provost area, Forent's oil production was restricted in the third quarter due to a failing water disposal pump. The pump has subsequently been replaced, resulting in a 20% increase in water disposal capacity.
ONGOING EXPLORATION - MONTGOMERY
At Montgomery, our joint venture partner did not elect to drill an option well, citing cost overruns while drilling the 14-12 well. This option has now expired. Forent is actively in discussion with a potential partner to drill the next exploration well at Montgomery.
To date, Forent has identified four separate naturally fractured trends at Montgomery. The 14-12 well has proven that one of the trends has been drained by the 06-06 well which produced over 1.5 million barrels of light sweet crude. The fact that the 2WS in the 06-06 and 14-12 wells are in pressure communication through a system of natural fractures, which can be identified geophysically, validates the 2WS play concept in this area. Based on our proprietary 3D seismic, we have identified twelve vertical drilling locations along the remaining three undrilled trends.
OUTLOOK
At Twining, additional oil and natural gas production from three new wells have provided incremental funds flow and have strengthened the Company's asset base. These wells have had varied results, with one of the three exhibiting significantly lower production than anticipated. This well is currently shut in for pressure build up to determine if stimulation is required.
Offsetting horizontal well production in the Pekisko formation is providing superior production rates to vertical wells. As a result, Forent is now examining a horizontal well program at Twining as the next step to the development of the property.
At Wayne, various exploitation strategies for this asset are under review. Forent has identified three (two net) horizontal development wells on held lands. We anticipate firming up plans with our 50% working interest partner for a horizontal development well.
During the third quarter, Forent purchased an additional six sections of mineral rights and has acquired more than a Township of contiguous petroleum and natural gas mineral rights at Crown land sales over the last year. These lands have multi-zone potential for oil and natural gas from relatively shallow horizons (less than 1,300 metres) and are located within Forent's southeastern Alberta core area.
The initial development phase of our Twining property was the first step in our plan to materially increase oil and associated gas production during 2014. Within our portfolio we have several additional low risk exploitation opportunities. With the recent decline in oil prices the Company is reevaluating the timing of its capital deployment program. In parallel, Forent continues to evaluate internally generated exploration prospects, complementary acquisition opportunities and corporate merger opportunities.
Shares of Forent trade on the TSX Venture Exchange under the symbol "FEN".
ADVISORY: Certain information in this news release, including the operations at the Company's properties, constitute forward-looking statements under applicable securities laws. Although Forent believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Forent can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The forward-looking statements contained in this news release are made as at the date of this news release and the Corporation does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company's registered filings which are available at www.sedar.com.
BOE presentation:
Barrel ("bbl") of oil equivalent ("boe") amounts may be misleading particularly if used in isolation. All boe conversions in this report are calculated using a conversion of six thousand cubic feet of natural gas to one equivalent barrel of oil (6 mcf=1 bbl) and is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
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