|November 14, 2008 |
|Candax Provides Operations Update and Guidance for 2009 |
|TORONTO, ONTARIO--(Marketwire - Nov. 14, 2008) - |
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Candax Energy Inc. (TSX:CAX) today provided an update concerning its current operations and guidance on capital expenditure and forecast production for 2009.
Current gross oil production from the offshore El Bibane field is approximately 2,000 bopd (1,446 bopd net to Candax) and 6.5 mmcf/d (4.7 mmcf/d net to Candax) of natural gas, which is sold to the SEEB power generation plant. Gas recycling commenced in October and an additional 10 mmcf/d (gross) of natural gas is re-injected to the reservoir to optimize recovery of liquids from the reservoir. Engineering studies are ongoing to seek ways in which to increase production from the two production wells, EBB-3 and EBB-4.
At the onshore Ezzaouia field, current gross oil production is approximately 1,400 bopd (387 bopd net to Candax). The EZZ-18 well, which was spudded in August has reached its target depth and is being completed for production. The results from the well logs are in line with expectations and production from this well is anticipated to commence in December 2008, following the installation of flow lines to connect the well to the field production facilities.
The Company's 2D seismic acquisition program in Block 1101, Madagascar commenced in September and is close to completion. Approximately 160 line kilometres were acquired in the Ambilobe area and a further 20 line kilometres is being acquired in the Ankaramy area and will be completed before the end of November. Initial results are extremely encouraging and the processing and interpretation of the data will continue through the first quarter of 2009 in order to define prospects and target potential drilling locations.
Previous guidance on the Company's 2008 drilling program referred to the planned re-entry and sidetrack of the Chaal-1 exploration well, and the drilling of an exploration well at Robbana. In consideration of the current global economic crisis, neither of these operations will now be undertaken in 2008. The wells are instead incorporated in the 2009 budget, with Chaal as a firm commitment expected to be drilled in the second half of 2009 and Robbana as a discretionary item. Each of the wells is budgeted at a net cost to Candax of US$5 million.
Chaal-1 was drilled in 2006 but could not be tested due to formation damage caused by the heavy mud weights required to manage the high pressures encountered. Candax and its partners subsequently agreed to drill a deviated sidetrack of the Chaal-1 well using managed pressure drilling to further evaluate the commerciality of the gas discovery. The sidetrack had been expected to commence in 2008 following completion of EZZ-18 utilizing the CTF-6 drilling rig presently deployed to drill that well. However, with the recent upheavals in the economic and commercial environment, the Chaal joint venture partnership has taken the decision to defer the planned program to 2009.
The Company has revised its guidance on forecast net production for the fourth quarter downwards from 2,800 boepd (2,000 bopd and 4.7 mmcf/d) to 2,400 boepd (1,750 bopd and 3.9 mmcf/d). This is primarily due to operational difficulties encountered in the EZZ-18 drilling program which have delayed the estimated commencement of production from the well by 60 days.
Candax's continuing focus for 2009 will be to maximize production and cash flow from the El Bibane and Ezzaouia fields. With this objective in mind, the approved firm capital development expenditure program for 2009 is presently limited to an upgrade to water handling capacity at El Bibane (US$0.5 million net to Candax), and the drilling of the Ezzaouia-5 development well (US$0.8 million net to Candax). The Company's guidance for 2009 forecasts average net oil production in the range of approximately 1,700 to 2,100 bopd and net sales of natural gas to SEEB of approximately 4.7 mmcf/d (2,400 to 2,900 boe/d).
Michael Wood, President and CEO, stated, "Candax has positioned itself to withstand the current uncertain economic conditions and substantially weaker commodity prices. As announced in our third quarter results, Candax is maintaining a healthy cash balance and strong operating cash flows, sustained by our competitively low cost production base and strong netbacks per barrel. In addition, we have limited our firm capital commitments for the remainder of 2008 and for 2009 and expect that these will be financed from existing facilities and cash resources without the need for external sources of capital. Candax holds a number of low risk organic growth opportunities within its portfolio and will continue its strategy to develop these, as well as developing our exploration plays in Tunisia and Madagascar, which have world-class potential."
In other news, the Board of Directors has given consideration to its composition having regard to a growing preference in the investment community for smaller boards comprised largely of non-executive, independent directors to enhance corporate governance. To this end, John Clarke has resigned as a director. Mr. Clarke remains in his managerial position as Executive Vice President, Corporate.
Candax Energy Inc. is an international energy company with its head office in Toronto and offices in London, Tunis, Dubai and Madagascar. The Candax group is engaged in exploration and the production of oil and gas and power generation in Tunisia and holds an interest in an exploration permit in Madagascar. Candax was formed through the combination of a highly experienced executive management team with successful Canadian founders and financiers, to develop an international upstream oil and gas asset portfolio.
This press release includes "forward looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the oil and gas industry (including operational risks in exploration development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses; the uncertainty surrounding the ability of Candax Energy Inc. to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Candax Energy Inc. to fund the capital and operating expenses necessary to achieve the business objectives of Candax Energy Inc., the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by Candax Energy Inc. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of Candax Energy Inc. should not place undue reliance on these forward-looking statements. Statements in relation to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.
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Candax Energy Inc.
Executive Vice President, Corporate
Fax: (416) 364-5400
CHF Investor Relations
(416) 868-1079 x. 239
|INDUSTRY: Energy and Utilities - Oil and Gas |