Advantage Announces 12 MMCFD Montney Horizontal Well On-Production, Well Tests Exceeding Expectations across the Glacier Land Bl
08 Dicembre 2009 - 3:20AM
PR Newswire (US)
(TSX: AAV, NYSE: AAV) CALGARY, Dec. 7 /PRNewswire-FirstCall/ --
Advantage Oil & Gas Ltd. ("Advantage" or the "Corporation") is
pleased to provide an operational update regarding its Montney
horizontal well drilling at Glacier, Alberta and highlights of its
proposed development program for the first quarter of 2010. Montney
Horizontal Well On-Production at 12 MMCFD - A new Glacier Montney
well was brought on-stream at a sustained production rate of 12
mmcfd at a flowing pressure of 1,300 psig. The well (100% Advantage
working interest) was drilled horizontally into the Upper Montney
zone and completed with 12 fracs along the horizontal section. -
This horizontal well was recently production tested at over 8.9
mmcfd and the actual production rate has exceeded expectations as
the well cleaned-up upon initial production. - Existing facilities
and gathering systems at Glacier are currently at capacity.
Facilities and gathering system expansions which include a new 50
mmcfd gas plant (Advantage 100% working interest) are under
construction and targeted for completion during the second quarter
of 2010. Montney Well Tests Exceeding Expectations across our
Glacier Land Block - The last six horizontal wells drilled at
Glacier were production tested at an average rate of over 6.5 mmcfd
per well at an average flowing pressure of 900 psi. This represents
a 63% improvement on the average test rates observed in our initial
8 Upper Montney wells and ranks within the top quartile of well
test results within the Montney trend. This improvement is
attributed to i) improved geological understanding of the Montney
as we delineate our land block and ii) enhanced completion
techniques. Cost efficiencies have greatly increased with an
average reduction of 43% in drilling costs per meter and a 57%
reduction in completion costs per frac. - Two of our last six Upper
Montney horizontal wells (100% Advantage working interest) were
drilled on the eastern portion of our land block and flowed at an
average rate of 8.1 mmcfd at an average flowing pressure of 812
psi. These wells prove up a significant area of un-drilled acreage
within our Glacier property and are located approximately eight
miles from some of our recently tested wells. - Four horizontal
wells have been drilled targeting the Lower Montney zone since July
2009. One of these wells (Advantage 100% working interest) is
adjacent to some of the highest rate wells along the Lower Montney
trend. The other three wells (1.1 net wells) were drilled on joint
interest lands. Completion and test results on these four Lower
Montney wells are expected in early 2010. Nikanassin Resource
Potential to be Tested at Glacier - Advantage has recently licensed
a Nikanassin horizontal well at Glacier which will be drilled in
2010. We are excited about the future resource potential in the
Nikanassin which has yet to be evaluated with horizontal well and
multi-frac technology at Glacier. - Advantage has a 93% average
working interest ownership in 71 gross (66 net) sections of land in
the Nikanassin formation at our Glacier land block. - The
Nikanassin formation is located above the Montney formation and has
been identified over the entire Glacier land block through
geological mapping with gross formation thicknesses of up to 50
meters present within the target interval. - Productivity in the
Nikanassin has been demonstrated by several vertical wells at
Glacier which have been on production since 2003. One of our 100%
working interest vertical Nikanassin wells demonstrated an initial
production rate of 1.4 mmcfd and has produced a total of 0.5 Bcf
since 2004. The well continues to produce and compares favorably to
some of the better vertical Montney wells on our acreage.
Horizontal well and multi-frac technology is anticipated to
significantly improve the initial production rate and the
recoverable reserves per well. - Development economics for the
Nikanassin will be highly efficient in regard to facilities costs
as the extensive facility infrastructure that is currently being
developed for the Montney can be utilized to accommodate future
production from both formations as required. Glacier Phase II
Development Program On-Track to 50 MMCFD - Operational activities
which include drilling, completions and facilities expansions are
on-schedule to achieve a production target of 50 mmcfd from our
Glacier property by the second quarter of 2010. - To date, 8 of the
22 horizontal wells that have been drilled since July 2009 have
been completed and tested. Combined production tests for these 8
wells amount to over 44 mmcfd. - Regulatory approvals for
Advantage's new 50 mmcfd gas plant (100% working interest) and
associated gas gathering pipeline expansions at Glacier have been
received and construction has commenced. Our 50 mmcfd gas plant
will eliminate third party processing fees and is anticipated to
reduce operating costs at Glacier by 67% from $8.25/boe to
$2.75/boe. Guidance and Hedging - Given the high level of
operational activity, corporate guidance for 2010 will be provided
early in the New Year. - Advantage's strong hedging program which
includes 58% of our natural gas production for 2010 at an average
price of $7.46 Cdn AECO per mcf significantly enhances our ability
to leverage capital spending during this low supply cost
environment and to capitalize on the Alberta Royalty Incentive
Programs. Advisory The information in this press release contains
certain forward-looking statements, including within the meaning of
the United States Private Securities Litigation Reform Act of 1995.
These statements relate to future events or our future intentions
or 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",
"demonstrate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe", "would" and similar expressions and include statements
in the press release relating to, among other things, resource
estimates, timing of drilling, completion and testing of certain
wells, expected results of the use of horizontal well and
multi-frac technology, expected economics of development with
respect to the Nikanassin formation, expected production and
operating costs with respect to our Glacier Phase II Development
Program and guidance and hedging. These statements involve
substantial known and unknown risks and uncertainties, certain of
which are beyond Advantage's control, including: the impact of
general economic conditions; industry conditions; 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 and
resources; 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 and income trusts; geological,
technical, drilling and processing problems and other difficulties
in producing petroleum reserves; and obtaining required approvals
of regulatory authorities. Advantage's actual decisions,
activities, 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 Advantage will derive from them. Except as required
by law, Advantage undertakes no obligation to publicly update or
revise any forward-looking statements. For additional risk factors
in respect of Advantage and its business, please refer to Advantage
Energy Income Fund's (as predecessor to Advantage) Annual
Information Form dated March 18, 2009 which is available on SEDAR
at http://www.sedar.com/. References in this press release to test
production rates, initial productivity, initial flow rates and
average flowing pressure are useful in confirming the presence of
hydrocarbons, however such rates are not determinative of the rates
at which such wells will commence production and decline
thereafter. While encouraging, readers are cautioned not to place
reliance on such rates in calculating the aggregate production for
the Advantage. Barrels of oil equivalent (boe) may be misleading,
particularly if used in isolation. A boe conversion ratio has been
calculated using a conversion rate of six thousand cubic feet of
natural gas to one barrel. Such conversion rate is based on an
energy equivalency conversion method application at the burner tip
and does not represent an economic value equivalency at the
wellhead. This press release contains references to estimates of
natural gas classified as total petroleum initially in place which
are not, and should not be confused with, estimates of oil and gas
reserves. "Total petroleum initially in place" is defined in the
Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") as
the quantity of petroleum that is estimated to exist originally in
naturally occurring accumulations. Total petroleum initially in
place 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. Both the discovered and undiscovered portion of the
total petroleum initially in place can be divided into recoverable
and unrecoverable portions, with the estimated future recoverable
portion from known accumulations classified under the COGE Handbook
as reserves and contingent resources and the recoverable portion
from undiscovered accumulations classified under the COGE Handbook
as prospective resources. The estimates of total petroleum
initially in place contained in this press release have been
internally estimated by Advantage and have not been evaluated or
audited by an independent engineering firm. Due to the stage of
evaluation of the estimates of total petroleum initially in place,
it cannot be determined whether the volumes represent contingent
resources, prospective resources, reserves or unrecoverable
resources. There is no certainty that any portion of the total
petroleum initially in place will be discovered. If discovered,
there is no certainty that the total petroleum initially in place
will be developed and whether it will be commercially viable to
produce any portion of the total petroleum initially in place.
DATASOURCE: Advantage Oil & Gas Ltd. CONTACT: Investor
Relations, Toll free: 1-866-393-0393, ADVANTAGE OIL & GAS LTD.,
700, 400 - 3rd Avenue SW, Calgary, Alberta, T2P 4H2, Phone: (403)
718-8000, Fax: (403) 718-8300, Web Site:
http://www.advantageog.com/, E-mail:
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