Cabot Energy, the AIM quoted oil and gas company focused on production led growth balanced with high impact exploration and appraisal opportunities, provides the following update on the Company's production and operations ahead of the start-up of the Canadian summer work programme.
§ Production in Canada is currently in line with guidance at up to 550 barrels of oil per day (bopd) (on a gross basis, with the Company's working interest at 75 per cent.)
- Some single well batteries are being intermittently shut in due to trucking restrictions as the conditions remain wet in the area
§ Two wells, recently acquired and brought into production at good rates, require routine maintenance with a workover rig which is planned to occur in August and should add 80 bopd (gross)
§ Approximately 130 barrels of oil equivalent per day (boepd) of gas production is currently accruing to the Company from the Civita gas field onshore Italy, which was recently acquired (announced on 8 June 2017)
- The acquisition has an economic effective date of 1 January 2017 resulting in the net economic benefit of the production from 1 January 2017 to completion due to be paid to the Company on completion
- Completion is subject to regulatory approval and is expected to occur before the year end
Canadian summer work programme
§ The Company is about to start a planned maintenance and inspection programme at its main 13-36 facility, expected to last up to 10 days
§ The 2017 summer work programme is due to commence in August, targeting an additional 300 bopd (gross) production in Canada
§ Programme to include:
- two side tracks from existing wells in the Rainbow region
- the recompletion of two previously drilled wells in the Virgo region to enable water disposal downhole and the trucking of dry oil to the Company's facilities
- three workover operations on wells in the Rainbow region to restart production
§ Gross cost of the programme is expected to be US$3.5 million ($2.6 million net)
Year end production rates
§ Following the summer work programme, gross production in Canada is expected to be between 800 and 1,000 bopd (600 and 750 bopd net)
§ With the addition of the Civita gas field production of 130 boepd, total production net to the Company is expected to be between 730 and 880 boepd towards the end of the year
A subsurface project is ongoing to map the wider Keg River play across the Virgo area, along with the potential of the other hydrocarbon producing horizons present throughout the acreage. The outcome of this study will be provided to independent reserve engineers for inclusion in an updated reserves report for the Company's Canadian assets by year end as well as to assist in the planning of a 2018 work programme.
The Company continues to evaluate new acquisition opportunities to expand production and complement organic growth in its core operational regions of Canada and Italy.
Keith Bush, Chief Executive Officer of Cabot Energy, commented:
"I am very pleased to see the growing levels of production from Canada following the successful completion of the work programme from the first half of the year. Additional production from here should see increasingly material cashflow, even at current oil prices, and I am confident in the upside potential of the assets, both from a production and cashflow perspective.
"The summer programme involves the drilling of side tracks from existing well bores to access the large amounts of oil still in place within the reefs on our acreage. This represents an important new step in the development of the Company's acreage with further possible side track candidates available for drilling in 2018.
"Recompletion of the Virgo wells is a means to avoid expensive third party processing costs and the cost of trucking water, improving the net cashflow. Water injection should also provide some pressure support to the oil production from the reefs. This combined benefit increases the amount of economically recoverable oil significantly from each well and should be repeatable in many other locations within our operations."