CALGARY, ALBERTA--(Marketwire - Sept. 10, 2012) - Celtic Exploration Ltd. ("Celtic" or the "Company") (News - Market indicators) is pleased to provide an update on recent operations activity.
RESTHAVEN - Montney
At Jayar, Alberta, in the northern portion of Celtic's Resthaven land block, the Company has completed a horizontal well located at 4-22-61-3W6 (100% WI). The well was drilled with a horizontal lateral of 1,545 meters in the Montney formation and was completed with a 900 tonne, 18-stage nitrogen foam fracture. The well was flowed on clean-up for 194 hours and during the last 24 hours of the test the well was flowing at 11.7 MMCF per day of raw gas and 362 barrels per day of condensate with a flowing tubing pressure of 8,748 kPa (1,268 psi). After processing the gas with shallow-cut recoveries at the gas plant, the Company expects liquids production, including field condensate, to be in the range of 45 to 50 barrels per MMCF of raw gas.
At Kakwa, Alberta, north of Celtic's Resthaven land block, the Company has completed a horizontal well located at 3-28-64-4W6 (100% WI). The well was drilled with a horizontal lateral of 1,492 meters in the Montney formation and was completed with a 900 tonne, 15-stage nitrogen foam fracture. The well was flowed on clean-up for 132 hours and during the last 24 hours of the test the well was flowing at 1,596 barrels per day of 45° API oil with associated gas of 2.5 MMCF per day, at a flowing tubing pressure of 2,960 kPa (429 psi). This well offsets a well previously drilled by Celtic which has been on production for a year and has produced approximately 86,000 barrels of oil and 193 MMCF of natural gas.
RESTHAVEN INFRASTRUCTURE
Construction of the remaining six kilometre portion of the main pipeline system in the southern portion of the Resthaven land block, including a river crossing, is just being completed. After pressure testing the pipeline and final well tie-ins, Celtic expects to commence production from two Montney horizontal wells and one dual Montney-Cretaceous horizontal well in the southern block during the week of September 24, 2012.
KAYBOB - Dunvegan
In the Fir-Kaybob-Chickadee areas of Alberta, the Company has drilled three (100%WI) horizontal wells in the Dunvegan formation.
The first well located at 1-27-60-17W5 was drilled with a horizontal lateral of 1,767 metres and was completed with a 526 tonne, 20-stage nitrogen foam fracture. The well was flowed on clean-up for 91.5 hours and during the last 24 hours of the test the well was flowing at 1,899 barrels per day of 32° API oil with associated gas of 985 MCF per day, at a flowing tubing pressure of 2,720 kPa (394 psi).
The second well located at 2-21-60-19W5 was drilled with a horizontal lateral of 1,239 metres and was completed with a 432 tonne, 18-stage nitrogen foam fracture. The well was flowed on clean-up for 107 hours and during the last 24 hours of the test the well was flowing at 255 barrels per day of 32° API oil with associated gas of 248 MCF per day, at a flowing tubing pressure of 167 kPa (24 psi).
The third well located at 4-26-59-22W5 was drilled with a horizontal lateral of 2,834 metres and was completed with a 552 tonne, 22-stage nitrogen foam fracture. The well is currently being tested.
KAYBOB - Duvernay
To date in 2012, Celtic has drilled 5 gross (3.7 net) horizontal wells in the Duvernay shale formation. The status of these wells is as follows:
- 4-11-60-20W5 (33.3% WI) - drilled, completed 6 fractures and tested;
- 15-31-60-19W5 (100% WI) - drilled, completed 22 fractures, with 5 fractures remaining;
- 1-25-59-19W5 (100% WI) - drilled, completed 25 fractures and currently testing;
- 13-9-60-19W5 (50% WI) - drilled and waiting on completion; and
- 16-33-59-19W5 (86.1% WI - drilled and waiting on completion.
The Company expects to provide another operations update after it has obtained well test results from the above mentioned Kaybob Duvernay wells.
HEDGING CONTRACTS
As part of its on-going risk management program, Celtic has entered into the following financial instrument derivative contracts, subsequent to June 30, 2012:
- Natural gas: fixed price swap on AECO 5A for 30,000 GJ per day at $2.40 per GJ for the period from August 1, 2012 to October 31, 2012; and
- Crude oil: fixed price swap on NYMEX WTI for 2,000 barrels per day at US$90.72 per barrel for the period from January 1, 2013 to December 31, 2013.
2012 GUIDANCE
Celtic continues to remain optimistic about its future prospects. Celtic is opportunity driven and is confident that it can continue to grow the Company's production base by building on its current inventory of development prospects. Celtic will endeavour to maintain a high quality product stream that on a historical basis receives a superior price with reasonably low production costs. In addition, the Company takes advantage of royalty incentive programs in order to further increase netbacks. Celtic will continue to focus its exploration efforts in areas of multi-zone hydrocarbon potential.
Celtic re-confirms its exit 2012 production guidance of 29,900 BOE per day. In addition, the Company's 2012 net capital expenditure program remains at $322.0 million.
Celtic expects production in 2012 to average between 22,000 and 23,000 BOE per day. Average production in 2012 is expected to be weighted 24% oil and 76% gas; however, operating income in 2012 is expected to be weighted 78% oil and 22% gas. At the low end of the range of 2012's average production forecast, this represents a 36% increase from average production of 16,212 BOE per day in 2011. On a production per common share basis, the increase would be 26%.
The Company's average commodity price assumptions for 2012 are US$95.50 per barrel for WTI oil, US$2.80 per MMBTU for NYMEX natural gas, $2.20 per GJ for AECO natural gas and a US/Canadian dollar exchange rate of US$1.000. These prices compare to average 2011 prices of US$95.12 per barrel for WTI oil, US$4.07 per MMBTU for NYMEX natural gas, $3.43 per GJ for AECO natural gas and a US/Canadian dollar exchange rate of US$0.9893.
After giving effect to the aforementioned production and commodity price assumptions, funds from operations for 2012 is forecasted to be approximately $134.0 million or $1.24 per common share, diluted.
Changes in forecasted commodity prices and variances in production estimates can have a significant impact on estimated funds from operations and profit. Please refer to the advisory regarding forward-looking statements.
Celtic estimates 2012 year-end bank debt, net of working capital, to be approximately $231.0 million, which provides the Company with approximately $104.0 million of unused and available bank credit at year-end.
Advisory Regarding Forward-Looking Statements
This document contains expectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operations or performance that constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking statements") under applicable securities laws. Undue reliance should not be placed on forward-looking statements. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements. We caution that the foregoing list of risks and uncertainties is not exhaustive. Events or circumstances could cause actual dates to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this document are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.
Readers are cautioned that the foregoing well test results are not necessarily indicative of long-term performance or of ultimate recovery.
Measurements and Abbreviations
All dollar amounts are referenced in Canadian dollars, except when noted otherwise. Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel and sulphur volumes have been converted to oil equivalence at 0.6 long tons per barrel. The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids ("NGLs"). NGLs include condensate, pentane, propane, butane and ethane. References to gas in this discussion include natural gas and sulphur.
Working interest is abbreviated as "WI". Million cubic feet is abbreviated as "MMCF". Thousand cubic feet is abbreviated as "MCF". Barrels are abbreviated as "bbls". Giga joules are abbreviated as "GJ". Kilopascals is abbreviated as "kPa" and pounds per square inch is abbreviated as"psi".
