Arsenal Energy Inc. Releases 2013 Budget
November 29 2012 - 6:52PM
Marketwired
Arsenal Energy Inc. (TSX:AEI) (OTC PINK:AEYIF)
Arsenal Energy Inc. ("Arsenal") is pleased to announce a $49
million capital exploration and development budget for 2013. Of
this amount, 68% or $33 million is expected to be spent on the
drilling and completion of 20 gross (14.63 net) horizontal wells.
Successful execution of the budget is expected to increase daily
production to approximately 4,500 boe/d by yearend 2013. Wells
drilled in 2013 are expected to contribute to lower operating costs
on a boe basis and Alberta wells will have a low one year royalty
rate. Based on mid-November forward strip pricing, Arsenal expects
2013 cash flow to total approximately $44 million ($0.29/share) and
to maintain a debt/cash flow ratio of approximately 1.5/1.
In North Dakota, Arsenal intends to drill 7 gross (1.63 net)
horizontal wells in the Bakken formation. Six (1.5 net) of the
wells are planned to be development wells at Stanley and Lindahl.
One well (.13 net) is planned to be Arsenal's first test well at
the emerging Rennie Lake/Black Slough property where Arsenal has
acquired over 4,700 acres of undeveloped Bakken land.
In Alberta, Arsenal intends to drill 13 gross (13 net)
horizontal wells. In Q3 2012 Arsenal drilled two horizontal wells
in the Glauconite at Princess. Those wells are currently producing
at a combined rate of 350 boe/d. Arsenal intends to drill four new
wells, the first to spud in December 2012 and 3 additional wells in
Q1 2013 in this prospect area. These wells should delineate the
repeatability of Arsenal's initial success. Well costs are
estimated at $1.7 million each and are eligible for a one year 5%
royalty. Arsenal has a 100% working interest in all of the
wells.
Arsenal has budgeted four 100% WI horizontal wells into the
Leduc formation at Chauvin. Offset wells drilled by other operators
have come on stream at approximately 100 bbls/d. Well costs are
estimated at $1.2 million. The first well is scheduled for after
spring breakup.
Arsenal has budgeted one 100% WI horizontal well targeting the
Cardium/Wilrich formation in the Alberta deep basin. Offsetting
wells drilled by other operators are coming on stream at between
300 and 600 boe/d. Liquids yields are 50 bbls/mmcf and 50% of the
liquids are free condensate. The initial cost to drill and complete
is estimated at $6.7 million.
To receive Company news releases via e-mail, please advise
info@arsenalenergy.com and specify "Arsenal Press Releases" in the
subject line.
Advisory
Certain information provided in this press release constitutes
forward-looking statements. Specifically, this press release
contains forward-looking statements relating to results from
operations, future production rates, proposed exploration and
development activities, our drilling prospect inventory, projected
costs, the timing of certain projects, our future debt levels and
liquidity position. The forward-looking statements are based on
certain key expectations and assumptions, including expectations
and assumptions concerning the availability of capital, the success
of future drilling, completion, recompletion and development
activities, the performance of new and existing wells, prevailing
commodity prices and economic conditions, the availability of
labour and services, weather and access to drilling locations and
the geological nature of the formations targeted. Although we
believe that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because we
can give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by
their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently
anticipated due to a number of factors and risks. These include,
but are not limited to, risks associated with the oil and gas
industry in general (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, reliance on
industry partners, availability of equipment and personnel,
uncertainty surrounding timing for drilling and completion
activities resulting from weather and other factors, changes in
applicable regulatory regimes and health, safety and environmental
risks), commodity price and exchange rate fluctuations. Certain of
these risks are set out in more detail in our Annual Information
Form which has been filed on SEDAR and can be accessed at
www.sedar.com. Except as may be required by applicable securities
laws, Arsenal assumes no obligation to publicly update or revise
any forward-looking statements made herein or otherwise, whether as
a result of new information, future events or otherwise.
BOE Disclosure
The term barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet per barrel (6 mcf/bbl) of natural gas to
barrels of oil equivalence is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. All boe
conversions in this press release are derived from converting gas
to oil in the ratio mix of six thousand cubic feet of gas to one
barrel of oil.
Analogous Information
In this new release, Arsenal has provided information with
respect to certain production and related information for lands
surrounding budgeted Alberta wells which is "analogous information"
as defined applicable securities laws. This analogous information
is derived from publicly available information sources available as
of the date hereof, which Arsenal believes are predominantly
independent in nature. Arsenal is unable to confirm that this
information was prepared by qualified reserves evaluators or
auditors or that it was prepared in accordance with the Canadian
Oil & Gas Evaluation Handbook. As such readers are cautioned
that the data relied upon by Arsenal may be in error. Regardless,
estimates by engineering and geo-technical practitioners may vary
and the differences may be significant. Arsenal believes that the
provision of this analogous information is relevant to Arsenal's
activities, given its acreage position and operations (either
ongoing or planned) in the area in question. This information has
also been included to help demonstrate the basis for Arsenal's
business plans and strategies. However, readers are cautioned that
there is no certainty that any of the development on Arsenal's
properties will be successful to the extent in which operations on
the lands in which the analogoushistorical production information
is derived from were successful, or at all, and, therefore, the
analogous information may not be analogous to Arsenal's properties.
The analogous historical production information should not be
construed as an estimate of future production levels or future
resources/reserves of Arsenal.
Contacts: Arsenal Energy Inc. Tony van Winkoop President and
Chief Executive Officer (403) 262-4854 (403)-265-6877 (FAX) Arsenal
Energy Inc. J. Paul Lawrence Vice President, Finance and CFO (403)
262-4854 (403)-265-6877 (FAX) Arsenal Energy Inc. 1900, 639 - 5th
Avenue S.W. Calgary, Alberta, T2P 0M9info@arsenalenergy.com
www.arsenalenergy.com