CALGARY,
AB, June 14, 2022 /CNW/ - Kiwetinohk
Energy Corp. (TSX: KEC) today announced record corporate upstream
production rates, the acquisition of a new early stage 150 MW solar
development project with a 150 MW expansion opportunity located in
Central Alberta and an increase of
its credit facility.
"Kiwetinohk continues to execute on its business plan, safely
and reliably increasing upstream production and increasing our
inventory of high-quality, no-carbon renewable power projects as we
build our position as an energy transition and ESG leader," said
CEO Pat Carlson.
Upstream update
May production averaged ~16,500 boe/d, reaching ~18,500 boe/d
during the first two weeks of June. Base performance from
existing wells continues to exceed expectations with two new
Duvernay wells brought on-stream
mid-May, increasing Kiwetinohk's year-to-date new well total to six
(4 Duvernay, 2 Montney).
The longest running well, a Duvernay producer at the 9-7 pad, achieved an
IP90 (first 90-day production average) of ~1,500 boe/d, including
~4.0 MMcf/d of natural gas and ~800 bbl/d of condensate and is
currently producing ~2,000 boe/d with ~6.0 MMcf/d of natural gas
and ~1,000 bbl/d of condensate.
"Kiwetinohk is confident in our new Duvernay and Montney wells," said CEO Pat Carlson. "The team continues to deliver with
focus on filling our gas processing capacity and capturing market
opportunities."
Drilling at the most recent four-well pad in Simonette continues
to progress efficiently with the last well expected to be drilling
in the lateral within the next few days. Overall delivery of
wells ahead of schedule has helped offset other industry-wide
inflationary pressures. These Simonette completions are
expected to commence in late June. This year's remaining
development program includes spudding nine wells on three
additional pads before year-end.
Green Energy update
In May, Kiwetinohk closed the acquisition of an early-stage
solar development project (Solar 3 or Phoenix) in Central
Alberta with a 150 MW first phase plus an optional 150 MW
expansion. Green Energy 2022 capital guidance remains
unchanged at $15-$20 million. The Solar 3 project is in
Alberta Electric System Operator (AESO) Stage 2, with environmental
studies and regulatory activities underway and a targeted final
investment decision in Q3 2023.
Solar 3 represents a valuable addition to Kiwetinohk's
diversified solar and gas-fired power portfolio, which now includes
1,950 MW of total generation capacity across six projects.
Solar 3 augments the Company's existing 700 MW solar projects
in southern Alberta, providing
geographic diversification, expanded development alternatives, and
opportunity for more construction synergies given the closely
staged solar projects.
Kiwetinohk continues to advance development, environmental
studies, regulatory activities and engineering cost estimates
across its Green Energy portfolio. The Homestead Solar
Project (Solar 1) recently advanced grid connection achieving AESO
Stage 3 and with Alberta Utilities Commission review of the power
plant and substation application underway. Capacity on the
Alberta electrical grid will be
confirmed and allocated to the 400 MW Homestead Solar Project at
the conclusion of AESO Stage 3.
Kiwetinohk increased the capital cost estimate for the Homestead
Solar Project to $750 million, an
increase of 15% from prior estimates which reflects inflation and
supply chain challenges impacting the global solar industry.
Despite increased capital costs, project economics remain
strong as increased industry wide capital costs are expected to
result in higher structural power prices in the Alberta market going forward.
Kiwetinohk's energy transition strategy and its efficient and
responsive assets position the company to benefit from increased
natural gas and electricity demand, a strong price environment and
market volatility.
Early-stage Green Energy projects
|
Solar
1
|
Firm
Renewable
1
|
Solar
2
|
Solar
3
|
NGCC
2
|
NGCC
1
|
Capacity
(nameplate)
|
400 MW
|
101 MW
|
300 MW
|
150 MW
|
500 MW
|
500 MW
|
Capacity (net to
Grid)
|
400 MW
|
97 MW
|
300 MW
|
150 MW
|
460 MW
|
460 MW
|
Site control
|
Options
secured
|
Land
acquisition in
progress
|
Options
secured
|
Options
secured
|
Land
acquisition in
progress
|
Options
secured
|
Public
consultation
|
Completed
|
Completed
|
Planning
underway
|
Planning
underway
|
Planning
underway
|
Planning
underway
|
Capacity
factor
|
27.1%
1
|
50%
2
|
27.1%
1
|
27.0%
1
|
90 %
|
90 %
|
Heat rate
8
(MJ/kWh: +/-5%)
|
-
|
7.6
|
-
|
-
|
6.0
|
6.0
|
Capital cost ($
MM)
|
$750 (Class
2)
|
$156 (Class 3)
3, 5, 6
|
$492 (Class 3)
6
|
$257 (Class
4) 6
|
$875 (Class 4)
3, 6
|
$875 (Class 4)
3, 6
|
Regulatory/ Environmental 4
|
AEP low risk
rating; AUC
application
submitted
|
AEP and AUC
applications
submitted
|
AEP low risk
rating
|
Work
underway
|
Work
underway
|
Work
underway
|
AESO
stage 7
|
3
|
2
|
1
|
2
|
2
|
2
|
Targeted FID
|
Q3 2022
|
Q4 2022
|
Q2 2023
|
Q3 2023
|
Q4 2023
|
Q3 2024
|
Targeted COD
|
Q4 2024
|
Q4 2024
|
Q2 2025
|
Q1 2025
|
Q4 2026
|
Q3 2027
|
|
1 Capacity factor over 25–year
project life based on DC/AC ratio of 1.35, and bifacial,
single axis tracking design.
|
2 Designed for intermittent
operation. The actual dispatch will be based on market conditions
and contracting.
|
3 Costs
exclude CCUS.
|
4 Regulatory and environmental
applications are filed with the Alberta Environment and Parks (AEP)
and Alberta Utilities Commission (AUC).
|
5 Capital
cost estimate includes USD $102.6 MM of input costs with an
assumed CAD/USD exchange rate of 0.78.
|
6 Capital costs are expected to
increase due to the state of the current economic environment of
inflation and supply chain challenges; specific capital cost
adjustments will be applied as projects progress through
engineering review stages.
|
7 Alberta
Electric System Operator (AESO).
|
8 Existing gas-fired generation
simple cycle heat rate 9.5, NGCC heat rate 7 as per 2021 Alberta
Annual Electric Study, EDC & Associates.
|
Increased bank credit facility
Kiwetinohk's lending facility, including Bank of Montreal as agent and co-leads ATB Financial
and National Bank of Canada,
recently completed their semi-annual borrowing base
redetermination, agreeing to amend the Senior Secured Extendible
Revolving Facility and increase Kiwetinohk's borrowing limit
by 19 percent to $375 million from
$315 million. Other lenders in the
facility include Royal Bank of Canada, Bank of Nova
Scotia and Business Development Bank of Canada.
The increased borrowing limit provides:
- Ample liquidity for current operations, including letters of
credit for ongoing marketing activities. Updated liquidity
metrics will be provided as part of the Company's second quarter
news release, expected in mid-August
- Additional funding flexibility, further bolstering the
Company's strong operational cash flows, for the 2022 planned
capital program
- Funding support for potential acquisition / growth
opportunities
Kiwetinohk's next semi-annual credit facility borrowing base
review is expected in November, 2022.
About Kiwetinohk
We, at Kiwetinohk, are passionate about climate change and the
future of energy. Kiwetinohk's mission is to build a
profitable energy transition business providing clean, reliable,
dispatchable, low-cost energy. Kiwetinohk develops and
produces natural gas and related products and is in the process of
developing renewable power, natural gas-fired power, carbon capture
and hydrogen clean energy projects. We view climate change with a
sense of urgency, and we want to make a difference.
Kiwetinohk's common shares trade on the Toronto Stock Exchange
under the symbol KEC.
Additional details are available within the year-end documents
available on Kiwetinohk's website at www.kiwetinohk.com and SEDAR
at www.sedar.com.
Oil and Gas Disclosure
The term "boe" may be misleading, particularly if used in
isolation. A boe conversion rate of six thousand cubic feet of
natural gas per barrel of oil (6 mcf:1 bbl) is based on an energy
equivalency conversion method primarily applicable at the burner
tip and do not represent a value equivalency at the wellhead. Given
that the value ratio based on the current price of crude oil as
compared to natural gas is significantly different from an energy
equivalency of 6:1, utilizing a conversion ratio of 6:1 may be
misleading as an indication of value.
Forward looking information
Certain information set forth in this news release contains
forward-looking information and statements including, without
limitation, management's business strategy, management's assessment
of future plans and operations. Such forward-looking statements or
information are provided for the purpose of providing information
about management's current expectations and plans relating to the
future. Forward-looking statements or information typically contain
statements with words such as "anticipate", "believe", "expect",
"plan", "intend", "estimate", "project", "potential" or similar
words suggesting future outcomes or statements regarding future
performance and outlook. Readers are cautioned that assumptions
used in the preparation of such information may prove to be
incorrect. Events or circumstances may cause actual results to
differ materially from those predicted as a result of numerous
known and unknown risks, uncertainties and other factors, many of
which are beyond the control of the Company.
In particular, this news release contains forward-looking
statements pertaining to the following:
- the timing for the Company's solar and Firm Renewable projects
to reach FID;
- estimates of CCUS costs; and
- the final design, performance projection, cost estimate, full
regulatory approval, internal and external funding of the Company's
planned power generation projects.
In addition to other factors and assumptions that may be
identified in this news release, assumptions have been made
regarding, among other things:
- the timing and costs of the Company's capital projects;
- the impact of increasing competition;
- the general stability of the economic and political environment
in which the Company operates;
- general business, economic and market conditions;
- the ability of the Company to obtain qualified staff, equipment
and services in a timely and cost efficient manner;
- future commodity and power prices;
- currency, exchange and interest rates;
- the regulatory framework regarding royalties, taxes, power,
renewable and environmental matters in the jurisdictions in which
the Company operates;
- the ability of the Company to obtain the required capital to
finance its exploration, development and other operations and meet
its commitments and financial obligations;
- the ability of the Company to secure adequate product
processing, transportation, fractionation and storage capacity on
acceptable terms and the capacity and reliability of
facilities;
- the impact of the Covid-19 pandemic on the Company; and
- the ability of the Company to successfully market its
products.
Readers are cautioned that the foregoing list is not exhaustive
of all factors and assumptions that have been used. Although the
Company believes that the expectations reflected in such
forward-looking statements or information are reasonable, undue
reliance should not be placed on forward-looking statements as the
Company can give no assurance that such expectations will prove to
be correct.
Forward-looking statements or information involve a number of
risks and uncertainties that could cause actual results to differ
materially from those anticipated by the Company and described in
the forward-looking statements or information. These risks and
uncertainties include, among other things:
- those risks set out in the AIF under "Risk Factors";
- the ability of management to execute its business plan;
- general economic and business conditions;
- the risk of instability affecting the jurisdictions in which
the Company operates;
- the risks of the power and renewable industries;
- operational and construction risks associated with certain
projects;
- the possibility that government policies or laws may change or
governmental approvals may be delayed or withheld;
- risks relating to regulatory approvals and financing;
- uncertainty involving the forces that power certain renewable
projects;
- the Company's ability to enter into or renew leases;
- potential delays or changes in plans with respect to power and
solar projects or capital expenditures;
- risks associated with rising capital costs and timing of
project completion;
- fluctuations in commodity and power prices, foreign currency
exchange rates and interest rates;
- risks inherent in the Company's marketing operations, including
credit risk;
- health, safety, environmental and construction risks;
- risks associated with existing and potential future lawsuits
and regulatory actions against the Company;
- uncertainties as to the availability and cost of
financing;
- the ability to secure adequate processing, transportation,
fractionation and storage capacity on acceptable terms;
- processing, pipeline and fractionation infrastructure outages,
disruptions and constraints;
- financial risks affecting the value of the Company's
investments; and
- other risks and uncertainties described elsewhere in this
document and in Kiwetinohk's other filings with Canadian securities
authorities.
Readers are cautioned that the foregoing list is not exhaustive
of all possible risks and uncertainties.
The forward-looking statements and information contained in this
news release speak only as of the date of this news release and the
Company undertakes no obligation to publicly update or revise any
forward-looking statements or information, except as expressly
required by applicable securities laws.
Future-Oriented Financial
Information
Financial outlook and future-oriented financial information
contained in this press release about prospective financial
performance, financial position or cash flows is based on
assumptions about future events, including economic conditions and
proposed courses of action, based on management's assessment of the
relevant information currently available. In particular, this press
release contains expected capital costs of the Company's proposed
power generation capital projects. These projections contain
forward-looking statements and are based on a number of material
assumptions and factors set out above and are provided to give the
reader a better understanding of the potential future performance
of the Company in certain areas. Actual results may differ
significantly from the projections presented herein. These
projections may also be considered to contain future oriented
financial information or a financial outlook. The actual results of
the Company's operations for any period will likely vary from the
amounts set forth in these projections, and such variations may be
material. See "Risk Factors" in the Company's AIF published on the
Company's profile on SEDAR at www.sedar.com for a further
discussion of the risks that could cause actual results to vary.
The future oriented financial information and financial outlooks
contained in this press release have been approved by management as
of the date of this press release. Readers are cautioned that any
such financial outlook and future-oriented financial information
contained herein should not be used for purposes other than those
for which it is disclosed herein.
FOR MORE INFORMATION ON KIWETINOHK, PLEASE
CONTACT:
Mark
Friesen, Director, Investor Relations
IR phone: (587) 392-4395
IR email: IR@kiwetinohk.com
Address: Suite 1900, 250 - 2 Street S.W.
Calgary, Alberta T2P 0C1
Pat
Carlson, CEO
Jakub Brogowski, CFO
SOURCE Kiwetinohk Energy