CALGARY, April 8, 2014 /CNW/ - Surge Energy Inc. ("Surge"
or the "Company") (SGY: TSX) announced today that, based upon
better than anticipated first quarter 2014 development drilling
results, a large new crude oil discovery in SW Saskatchewan, and excellent results from
several of the Company's ongoing waterflood projects, Surge has
already exceeded the Company's 2014 year end production exit
rate.
Accordingly, Surge is now revising upward the Company's 2014
year end production estimate from 16,550 boepd to 16,850 boepd (85
percent oil and NGLs).
On this basis, proforma the previously announced acquisition of
Longview Oil Corp. ("Longview"),
Surge is now projecting an increased 2014 production exit rate of
21,350 boepd (84 percent oil and NGLs).
Exciting First Quarter 2014 Drilling Results; Large New Oil
Pool Discovery
In the first quarter of 2014, Surge experienced better than
anticipated development drilling results across the Company's
entire asset base. During the quarter Surge drilled a total of 18
wells (13.3 net), with a success rate of 100 percent.
At Shaunavon in SW Saskatchewan, Surge drilled an exciting new
pool discovery in the Upper Shaunavon horizon (100% WI) at
16-36-5-20-W3. The horizontal well encountered 1,175 meters of
reservoir section and was completed with 21 frac stages. This
discovery well is currently producing over 300 bopd. The success of
this well confirms Surge's 3-D seismic interpretation of the Upper
Shaunavon interval over its lands.
Surge now maps over 125 million barrels of OOIP1 in
the Upper Shaunavon formation, with the potential for more than 64
additional locations (4 wells per section).
Surge also successfully drilled four (3 net) Lower Shaunavon
wells in SW Saskatchewan during
the first quarter of 2014 with excellent type curve results. In
addition, Surge has observed significant re-pressuring of the Lower
Shaunavon formation on both of the Company's four and eight well
per section waterflood pilots, as a result of the injection
commenced in the fourth quarter of 2013. Production from wells that
had been shut in (in order to re-pressure the reservoir) was
re-started at the end of March, 2014. Surge maps over 220 million
barrels of OOIP in the Lower Shaunavon formation, with a 1.96%
recovery factor to date. Surge has over 215 net Lower Shaunavon
drilling locations in SW
Saskatchewan, and full waterflood upside.
At Nipisi in NW Alberta, Surge
drilled one successful (100% WI) Slave Point horizontal, multi-frac
development well, immediately off-setting a horizontal injection
well. This exciting new well encountered near virgin reservoir
pressure, and is producing over 300 bopd. A third horizontal
injector was added to the pool during the first quarter of 2014.
The net waterflood response to date from the three existing
horizontal injectors is estimated currently to be approximately 230
bopd. The capital invested to establish this waterflood was
$3.75 million, providing a production
efficiency of $13,250 per bopd. This
high netback 80 million barrel OOIP light oil pool has a recovery
factor of less than one percent, with numerous follow-up locations,
and further waterflood upside. Surge anticipates converting two
more horizontal wells to injection at Nipisi over the remainder of
2014.
At Eyehill in Central Alberta,
during the first quarter of 2014 Surge successfully drilled two (2
net) wells into the Sparky formation. The wells are producing well
above the expected 180 day type curve rate. As a result of
successful farm-ins, Surge now estimates over 90 million barrels of
net OOIP in the Sparky formation, with less than one percent
recovered to date. Surge will be converting a horizontal well to
injection in the second quarter of 2014.
A successful offsetting 200 meter development well indicates
that this level of pool development will likely be required to
fully develop and waterflood this high quality Sparky oil pool. The
Company has over 47 (45 net) development locations at Eyehill based
on 400 meter inter-well spacing, however, with full development and
waterflood, this well count could double. In the last year at
Eyehill, Surge has organically grown production to over 900
boepd.
At Provost, Surge drilled one (1 net) horizontal, multi-frac,
Sparky well. The well was brought on production late in the first
quarter of 2014, and is producing at expected 180 day type curve
rates. The battery facilities will be expanded at Provost on this
45 million barrel OOIP pool to accommodate the conversion of a well
to injection, which is planned for the second quarter of 2014.
Surge has over 18 net development locations remaining at
Provost.
At Macoun in SE Saskatchewan, Surge drilled two (2 net)
horizontal, multi frac, Midale
wells. The wells are producing significantly above the expected 180
day initial rate. Since acquiring this elite Midale Marly pool in the fourth quarter of
2013, Surge has now increased net oil production to over 900 boepd,
from approximately 550 boepd at the time of purchase. This has been
accomplished through successful development drilling, a pump
optimization program, and the fracing of an existing, non-
stimulated, horizontal well.
At Manson in SW Manitoba,
during the first quarter of 2014 Surge focused on an expansion of
the waterflood through the conversion of two (2 net) horizontal,
Bakken wells to injection. The gathering and water injection
pipeline system was expanded to accommodate the single well battery
development locations that were drilled in 2013. Waterflood
approval was received for two additional sections of this elite,
high netback 76 million barrels OOIP light oil pool. Accordingly,
Surge will continue to expand the waterflood in these sections with
the conversion of two wells to injection in the third quarter.
Surge plans to drill two (1 net) wells at Manson over the balance
of 2014. During the first quarter of 2014 Surge also participated
with a joint venture operator in the drilling of two (1 net) Bakken
development wells. These wells were bought on production at the end
of the quarter. Surge has over 33 net development locations
remaining at Manson.
At Valhalla in NW Alberta, Surge drilled an exciting farm-in,
horizontal, multi-frac Doig well in section 13-75-9W6 (0.875 net).
This step-out well came on production March
26, and is currently producing significantly above type
curve expectations. Surge now expects the well to be very similar
in production potential to the prolific wells drilled by Surge in
2013 to the south in sections 12-75-9W6 and 7-75-8W6. Surge has
over 36 net development locations remaining at Valhalla.
In the Viking area of Southwest
Saskatchewan, Surge successfully drilled 2 (2 net) Viking
development wells. In addition, an experienced local operator
farmed-in on Surge's more exploratory acreage and drilled two (0.4
net) Viking earning, horizontal wells. The wells were placed on
production at the end of March. Surge has over 100 net development
locations remaining in the Viking area.
Upward Revision to 2014 Exit Rate
Based upon the excellent development drilling results discussed
above, the large new crude oil pool discovery in the Upper
Shaunavon formation in SW
Saskatchewan, and the excellent results from several of
Surge's ongoing waterflood projects, Surge has already exceeded the
Company's projected 2014 production exit rate target of 16,550
boepd (85 percent oil and NGLs).
Accordingly, Surge is now revising upward the Company's 2014
exit rate to more than 16,850 (85 percent oil and NGLs).
On this basis, proforma the previously announced acquisition of
Longview, Surge is now projecting
an increased 2014 production exit rate of 21,350 boepd (84 percent
oil).
Surge management will provide new updated guidance following the
closing of the Longview
acquisition in early June 2014.
FORWARD LOOKING STATEMENTS:
This press release contains forward-looking statements.
More particularly, it contains forward-looking statements
concerning: (i) estimated 2014 exit rates of production, (ii)
ultimate recovery factors at certain of Surge's properties, (iii)
planned drilling, development and waterflood activities, (iv) the
potential number of drilling locations at certain of Surge's
properties, and (v) the anticipated production profile of certain
of Surge's wells.
The forward-looking statements contained in this press release
are based on certain key expectations and assumptions made by
Surge, including expectations and assumptions concerning the
success of future drilling, development and completion activities,
the performance of existing wells, the performance of new wells,
the viability of waterflood projects, the availability and
performance of facilities and pipelines, the geological
characteristics of Surge's properties, the successful application
of drilling, completion and seismic technology, prevailing weather
conditions, commodity prices, royalty regimes and exchange rates,
the application of regulatory and licensing requirements and the
availability of capital, labour and services.
Although Surge believes 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 Surge 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, and health, safety and environmental risks), commodity
price and exchange rate fluctuations and uncertainties resulting
from potential delays or changes in plans with respect to
exploration or development projects or capital expenditures.
Certain of these risks are set out in more detail in Surge's Annual
Information Form which has been filed on SEDAR and can be accessed
at www.sedar.com.
The forward-looking statements contained in this press release
are made as of the date hereof and Surge 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.
Note: Boe means barrel of oil equivalent on the basis of 1 boe
to 6,000 cubic feet of natural gas. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of
1 boe for 6,000 cubic feet of natural gas is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the
wellhead. Boe/d means barrel of oil equivalent per day.
In this press release: (i) mcf means thousand cubic feet; (ii)
mcf/d means thousand cubic feet per day (iii) mmcf means million
cubic feet; (iv) mmcf/d means million cubic feet per day; (v) bbls
means barrels; (vi) mbbls means thousand barrels; (vii) mmbbls
means million barrels; (viii) bbls/d means barrels per day; (ix)
bcf means billion cubic feet; * mboe means thousand barrels of oil
equivalent; and (xi) mmboe means million barrels of oil
equivalent
Neither the TSX nor its Regulation Services Provider (as that
term is defined in the policies of the TSX) accepts responsibility
for the adequacy or accuracy of this release.
_________________________________________
1 Original Oil in Place (OOIP) is the equivalent to
Total Petroleum Initially In Place (TPIIP) for the purposes of this
press release. TPIIP is defined as that quantity of petroleum that
is estimated to exist originally in naturally occurring
accumulations. It includes that quantity of petroleum that is
estimated, as of a given date, to be contained in known
accumulations, prior to production, plus those estimated quantities
in accumulations yet to be discovered. There is no certainty that
any portion of the undiscovered resources will be discovered. There
is no certainty that it will be commercially viable to produce any
portion of the resources. A recovery project cannot be defined for
this volume of TPIIP at this time, and as such it cannot be further
sub-categorized. |
SOURCE Surge Energy Inc.