TSX Venture Exchange: PRY
CALGARY,
Jan. 14, 2014 /CNW/ - Pinecrest
Energy Inc. ("Pinecrest" or the "Company") announces an update to
its production guidance for the fourth quarter of 2013, its credit
facility and 2014 capital program.
Production Update
Based on field estimates, average production for
the fourth quarter of 2013 was approximately 2,580 boepd (97% oil
and liquids). Average production for the month of December,
based on field estimates, was 2,308 boepd, below the Company's
budget and previous guidance. Current production is estimated
to be 2,300 boepd (97% oil and liquids).
The production shortfall, relative to guidance,
was the result of a number of factors which include:
- Steeper than anticipated declines from the three most recently
drilled wells;
- Delayed start-up causing a corresponding delay in response at
three Otter waterfloods. Water injection was delayed until
mid-November to take advantage of a more economical water
source. This project was originally scheduled to be
commissioned on October 1, 2013 and
as a result of the delay, no production response was observed by
year-end; and
- Increased water-cut in three of the 22 offset producers to
water injection wells. At Evi #2 waterflood, both offset
wells are producing at higher water-cuts and the Company is
currently preparing a remedial action plan in an attempt to restore
oil production in the most adversely affected well. At Loon
#1 waterflood, one well is producing at a higher water-cut but
continues to produce at over two times the pre-injection rate.
Credit Facility and Corporate Debt
Pinecrest's syndication of Canadian chartered
banks have recently completed its semi-annual valuation and the
Company's credit facility remains at $165
million with a $150 million
revolving credit facility and a $15
million development facility. The next scheduled
review will occur on or before May
2014.
At December 31,
2013, the Company's net debt is anticipated to be
approximately $130 million.
2014 Capital Program
Presently, the Company plans to spend minimal
capital on minor production modifications for the first half of
2014 in an attempt to further arrest declines while continuing to
monitor the response of its 22 wells currently under pressure
maintenance. Until such time as there is full response
from the Company's waterflood initiatives that are not currently
exhibiting a response, Pinecrest will apply all of its free cash
flow towards reducing its indebtedness.
Advisory
The information in this press release
contains certain forward-looking statements. These statements
relate to future events or our future performance. All statements
other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "seek", "anticipate",
"plan", "continue", "estimate", "expect", "may", "will", "project",
"predict", "potential", "targeting", "intend", "could", "might",
"should", "believe", "would" and similar expressions. In
particular, forward looking statements in this press release
includes, but is not limited to: Pinecrest's capital program and
2014 business objectives, Pinecrest's 2014 budget, oil recovery
rates, the effects of waterfloods on recovery factors, the
potential success of waterfloods in the Slave Point area, decline
rates and type curves for wells, production rates, effect of
operations initiatives, timing for implementation of operating cost
initiatives, future rates for production and bank debt, downspacing
opportunities, the quantity of reserves, and projections of market
prices and costs. These statements involve substantial known and
unknown risks and uncertainties, certain of which are beyond
Pinecrest's control, including: the impact of general economic
conditions; industry conditions; changing reservoir
characteristics, regulatory approvals and permits; changes in laws
and regulations including the adoption of new environmental laws
and regulations and changes in how they are interpreted and
enforced; fluctuations in commodity prices and foreign exchange and
interest rates; stock market volatility and market valuations;
volatility in market prices for oil and natural gas; liabilities
inherent in oil and natural gas operations; uncertainties
associated with estimating oil and natural gas reserves;
competition for, among other things, capital, acquisitions, of
reserves, undeveloped lands and skilled personnel; incorrect
assessments of the value of acquisitions; changes in income tax
laws or changes in tax laws and incentive programs relating to the
oil and gas industry; geological, technical, drilling and
processing problems and other difficulties in producing petroleum
reserves. Pinecrest's actual results, performance or achievement
could differ materially from those expressed in, or implied by,
such forward-looking statements and, accordingly, no assurances can
be given that any of the events anticipated by the forward-looking
statements will transpire or occur or, if any of them do, what
benefits that Pinecrest will derive from them. Except as required
by law, Pinecrest undertakes no obligation to publicly update or
revise any forward-looking statements.
Statements relating to "reserves" or
"resources" are deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and
assumptions, that the resources or reserves described can be
profitably produced in the future.
Certain terms for measurement that may be
used in this press release do not have a standardized prescribed
meaning under GAAP and these measurements may differ from other
companies and accordingly may not be comparable to measures used by
other companies. The terms "funds from operations" and "operating
netback" are not recognized measures under the applicable GAAP.
Management of the Corporation believes that these terms are useful,
in addition to profit and loss and cash flow from operating
activities as defined by GAAP, for evaluating the Corporation's
operating performance and leverage. Funds from operations is
expressed as cash flow from operating activities before changes in
non-cash working capital and asset retirement expenditures.
Operating netback is a measure of operating margin used in capital
allocation decisions. Pinecrest defines operating netback as
average realized price per BOE, less royalties per BOE, less
operating and transportation expenses per BOE, plus any realized
gain or loss per BOE on financial instruments.
Certain information that may be provided in
this press release in relation to the results of waterflooding
Slave Point reservoirs on lands in close proximity to the land in
which the Company has an interest, is considered analogous
information under National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities. Such information is
based on publicly available information from governmental agencies
and other industry producers and has been provided to give an
indication of possible incremental recovery factors in the
specified area. Other than comparing such information to the
Company's own limited results in the specified area, the Company
has not independently confirmed the accuracy of this
information. There is no certainty that such incremental
recovery factors will be obtained of even if so obtained, whether
such factors can be achieved on an economic basis.
Barrels of Oil Equivalent ("boe") may be
misleading, particularly if used in isolation. A boe conversion
ratio of 6MCF:1bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does 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 the energy equivalency
of 6:1,utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE Pinecrest Energy Inc.