CALGARY, ALBERTA--(Marketwire - Sept. 10, 2012) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA.
Manitok Energy Inc. (the "Corporation" or "Manitok") (TSX VENTURE:MEI) is pleased to provide below an update on drilling and operations.
Manitok has completed the production testing of its latest drill in the Stolberg area of Alberta. The horizontal well was the eighth well of the 2012 drilling program. This well offset the original vertical oil discovery well which was the first Cardium oil well drilled in the 2012 program. The Cardium reservoir was intersected three times in Manitok's latest horizontal well bore. The lower intersection tested at an average rate of 460 bbls/d (375 net) of light oil over 21 hours. The middle Cardium intersection tested at an average rate of 525 bbls/d (428 net) of light oil over 91 hours. Both intervals showed no appreciable decline and free flowed 49° API oil to the surface over their respective test periods with little associated gas. Similar to the other horizontal wells in the program to date, the eighth well was not fracture stimulated.
The highest Cardium intersection was not tested because Manitok believes it is a gassy oil zone. The well is expected to be on production late in the fourth quarter of 2012. Manitok will produce the well from the two tested Cardium intersections. It is important to note that the potential initial production rate of the well cannot be determined by simply adding the test rates from the two intersections. Manitok anticipates that the initial production rate of the well will be at least at the higher rate of the two tested intersections mentioned above.
Through the farmin of an existing partner's working interest, Manitok increased its working interest, to the base of the Cardium formation, in the entire section that was drilled to 81.6% from 68% by paying 90.67% of the drilling and completion costs. With the results to date, Manitok believes that it has approximately 25 gross, unrisked drilling locations in the Cordel/Stolberg area.
The successful result on the eighth well significantly de-risks the presently drilling horizontal offset location, the ninth well of the 2012 program, which is expected to be completed in approximately one month.
Since early August, Manitok has been conducting extended production testing, with temporary facilities, on wells six and seven of the 2012 program. The two wells combined are currently producing approximately 1,200 bbls/d (948 net) of 43° API oil, which is being delivered to sales. The full productive capability of the wells is currently being restricted by the capacity of the temporary facilities which should be alleviated to some degree with the construction of the permanent facilities in the fourth quarter.
Manitok's production, excluding the volumes from the production testing of the three wells mentioned above (wells six, seven and eight), as of August 31, 2012, is approximately 2,325 boe/d with about 706 bbls/d of light oil and condensate.
The first Cardium well of the 2012 drilling program, a vertical well, is currently shut in due to the drilling of wells eight and nine. It will be back on production late in the fourth quarter, along with wells eight and nine.
The second well of the 2012 program, a horizontal well, is currently producing at about 910 boe/d (719 net), with 768 bbls/d (607 net) of light oil and 142 boe/d (112 net) of associated gas. The well has been on production since late May with some downtime. It has cumulatively produced about 72,000 bbls (56,880 net) of 52° API oil and 51 MMcf (40.3 net) of associated gas to date.
The third Cardium well of the 2012 program, a horizontal well in a depleted reservoir, different than the more prolific reservoirs mentioned above, is producing at about 68 bbls/d (43 net) of light oil. The fourth and fifth Cardium wells, both vertical wells, are expected to be fracture stimulated and tested in the fourth quarter.
Manitok entered into an additional extendable swap for its light oil since it released its second quarter financial results on August 29, 2012. The extendable swap was set at a price of CDN$98.00 WTI for 150 bbls/d for the next 16 months: September 1, 2012 to December 31, 2013. The counterparty to the swap has the right, up to December 31, 2013, to extend the swap at the same price for the duration of 2014 for 250 bbls/d.
Combined with the previous two swaps, Manitok has a total of 750 bbls/d of oil hedged at a weighted average price of CDN$101.26 WTI for the remainder of 2012. Manitok also has 450 bbls/d hedged at a weighted average price of CDN$97.77 WTI for all of 2013. The counterparty to the swaps has the right to call 300 bbls/d at CDN$106.50 WTI for all of 2013 up to December 31, 2012 and the right to call 750 bbls/d at a weighted average price of CDN$97.77 WTI for all of 2014 up to December 31, 2013.
Manitok is a public oil and gas exploration and development company focusing on conventional oil and gas reservoirs in the Canadian foothills. Manitok's corporate strategy is that of being an "early mover" in the exploitation phase of the development life cycle of hydrocarbon reserves in the Canadian Foothills. The Corporation will continue to utilize its experience and expertise to develop the untapped conventional sweet oil and liquids-rich natural gas pools in this large and under-exploited region of the Western Canadian Sedimentary Basin.
This press release contains forward-looking statements. More particularly, this press release contains statements concerning Manitok's operational and drilling plans and anticipated production rates.
The forward-looking statements in this press release are based on certain key expectations and assumptions made by Manitok, including expectations and assumptions concerning the success of future drilling and development activities, the performance of existing wells, the successful application of technology, the validity of the geological and other technical interpretations that have been performed by Manitok's technical staff, prevailing weather conditions, commodity prices, royalty regimes and exchange rates and the availability of capital, labour and services.
Although Manitok 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 Manitok 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 reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), uncertainty as to the availability of labour and services, commodity price and exchange rate fluctuations, unexpected adverse weather conditions and changes to existing laws and regulations. Certain of these risks are set out in more detail in Manitok's current Annual Information Form, which is available on Manitok's SEDAR profile at www.sedar.com.
Forward-looking information is based on estimates and opinions of management of Manitok at the time the information is presented. Manitok may, as considered necessary in the circumstances, update or revise such forward-looking information, whether as a result of new information, future events or otherwise, but Manitok undertakes no obligation to update or revise any forward-looking information, except as required by applicable securities laws.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated using a conversion ratio of six thousand cubic feet of natural gas (6 mcf) to one barrel of oil (1 bbl). This boe conversion ratio of 6 mcf to 1 bbl 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 release.