CALGARY, Dec. 19 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company") (TSX: WAV.A and WAV.B) is pleased to provide details on recent operational success and significant bank line increase. The company is forecasting record production and cash flow in 2008.
Operational update
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Breaker is actively drilling and completing light oil wells at all three of its high-netback oil growth properties, with two recent deep wells testing at combined rates of approximately 900 boe/d.
At Breaker's large light oil pool in Irricana, the company's third horizontal well has recently been brought on production at rates which exceed expectations. Still cleaning up after a large multiple fracture treatment, the well has been flowing at approximately 600 boe/d for the last week, consisting of 85% light oil and 15% solution gas (from field estimates). This well was Breaker's first application of a type of multiple fracture treatment similar to the methods currently being employed in the Bakken trend of Saskatchewan. The company's fourth horizontal well has recently been completed in a similar way, and is currently flowing back primarily load fluid. Breaker has spudded two more horizontal wells in the pool, which will be completed and brought on production early in 2008. The company is also recompleting several pre-existing horizontal wells with a similar multiple fracture technique. The first recompletion of this kind resulted in a more than tenfold production increase, from 10 boe/d to 110 boe/d, approximately one month after being put back on production.
At Girouxville, Breaker's high-netback exploratory oil property, the company has recently drilled and tested a new discovery at approximately 300 bbls/d of light oil (100% working interest). The well has no indications of water on logs or initial test, and has a similar pay zone and structural position compared to the nearby Breaker 13-15 well which produced an average of approximately 500 bbls/d of light oil in its first year. The new discovery is now on production at EUB-restricted rates of approximately 100 bbls/d. Breaker currently anticipates having production restrictions removed from the well via application for Good Production Practice (GPP) early in 2008. The company is now drilling a direct offset to the new discovery (50% revenue interest), and anticipates reaching total depth before year-end. Three other new pool locations (1.5 net) are being prepared for drilling over the next several months. It is anticipated that all recent and currently-planned wells in Girouxville will qualify for new pool royalty holidays.
At East Prairie, the company is currently drilling three wells to extend its significant light oil discovery. The current program has the potential to substantially increase light oil reserves from this shallow, accessible oil pool. Breaker has recently completed construction of a central oil battery which will drop operating costs significantly, and continues to plan for implementation of waterflood in 2008.
In British Columbia, Breaker plans to shoot a 3D seismic program in early 2008 on the company's 100 percent working interest Monias property. The prospect is a deep Leduc reef with an unrisked potential target size of 1 TCF. Breaker is preparing the original near-miss well for re-entry. The original well established the presence of more than 130 metres of tight dolomite, allowing for the possibility of a world-class pay column similar to other deep Leduc gas pools elsewhere in western Canada.
Increase in bank line
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Breaker's bank line has been increased by more than 28 percent from $74 million to $95 million which will allow the Company to continue to execute its business plan and maintain a conservative level of net debt. Management forecasts a conservative level of leverage at year end with a net debt to annualized fourth quarter 2007 cash flow ratio of 1.1.
2008 Guidance and Sensitivities
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Breaker plans its most active year ever in 2008 with total capital investment of approximately $70 million. Breaker's 2008 guidance is as follows:
Average Production Rate 5,900 boe/d
Exit Production Rate 6,200 boe/d
Cash flow $66 million
Cash flow per A share $1.84
Field Net Back $35.25/boe
Capital Program $70 million
Year-End Debt $58 million
Authorized Bank Line $95 million
Unused Bank Line Capacity $37 million
Q4 Annualized Debt to Cash Flow 0.8 times
The above guidance assumes US$80.00/Bbl WTI, CDN$6.50/mcf AECO and
US$/CDN$1.00 for 2008.
Breaker forecasts the following cash flow sensitivities based on its 2008
guidance:
CAD $000's %
US$1.00 change in WTI oil price: $892 1.3
CAD$0.10 change in AECO natural gas price: $502 0.8
$0.01 change in US/CAD foreign exchange rate: $706 1.1
Breaker Energy Ltd. is a junior oil and gas company focused on creating shareholder value by growing per share production and reserves through acquisitions and a focused exploration, development and exploitation plan.
Breaker has 36,213,754 Class A shares and 900,000 Class B shares outstanding.
Breaker Energy trades on the TSX under the symbols WAV.A and WAV.B.
Forward-Looking Statements
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This press release contains forward-looking statements concerning the Company's expectations of future production, cash flow, earnings and expansion of its oil and gas property interests and concerning the Company's exploration and development drilling, seismic operations, regulatory applications, payout estimates, capital expenditures, number and drilling locations, seismic acquisitions and facility upgrades. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration 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 relating to production, costs and expenses, and health, safety and environmental risks), acquisitions, commodity price, price and exchange rate fluctuation and uncertainties resulting from competition from other producers and ability to access sufficient capital from internal and external sources. Additional information on these and other risk factors that could affect the Company's operations and/or financial results are included in the Company's reports on file with Canadian securities regulatory authorities.
The forward-looking statements or information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Oil and Gas Advisory
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This press release contains disclosure expressed as "Boe/d". Boe means barrel of oil equivalent and Boe/d means Boe per day. All oil and natural gas equivalency volumes have been derived using the ratio of 6,000 cubic feet of natural gas to 1 barrel of oil. Boe equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of 6,000 cubic feet of natural gas to 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
In this press release: (i) mmboe means million boe; (ii) boe/d means boe per day; (iii) bbls/d means barrels per day; (iv) mcf means thousand cubic feet; (v) mmcf means million cubic feet; (vi) mcf/d means thousand cubic feet per day; and (vii) mmcf/d means million cubic feet per day.
The TSX does not accept responsibility for the adequacy or accuracy of
this release.
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