BlackPearl Resources Inc. announced that, due to recent volatility in the debt capital markets, it has decided not to proceed with its proposed US$350 million second-lien senior secured term loan facility at this time. The Company will re-evaluate its financing options when capital markets stabilize. Construction of the Onion Lake thermal enhanced oil recovery project will be deferred until alternative financing is established; however, engineering and certain long lead planning will continue.
Oil and gas production in the second quarter is expected to average between 9,500 and 10,000 barrels of oil equivalent (boe) per day, an increase from the first quarter production of 9,087 boe per day. The increased production in conjunction with improved heavy oil differentials will have a positive impact on our second quarter revenues and cash flows. The increase in production is attributable to first quarter drilling at Onion Lake as well as improved productivity from our steam-assisted gravity drainage (SAGD) pilot well at Blackrod. We implemented a less restrictive sand control program late in the first quarter which has resulted in the pilot well averaging in excess of 600 barrels of oil per day during the month of June. We expect the pilot well to stabilize at 400 to 500 barrels of oil per day. Once the first well is stabilized we will initiate steam to our second well pair to test a different completion technique.
At Onion Lake, we have received technical approval from the Saskatchewan government for the 12,000 barrel per day thermal EOR project.
John Festival, President of BlackPearl, commented, "Our thermal projects at both Blackrod and Onion Lake are significant mid to long term value generators for the Company. It is prudent to initiate these projects on a solid financial footing and, until the debt markets stabilize, we have decided to defer our proposed debt financing."