Celtic provided an operations activity update.
In the north-west portion of Celtic's Resthaven land block, the Company completed a horizontal well located at 01-29-064-04W6 (50% WI). This well was operated by Celtic on behalf of itself and its partner, Seven Generations Energy Ltd. The well was drilled as a re-entry to an existing wellbore and was completed with a 16-stage foam fracture technique. After a seven day test, the well was producing natural gas at a rate of 4.7 MMCF per day and field condensate at 1,209 barrels per day (1,986 BOE per day combined, before plant shrinkage and before NGL extraction), at a flowing wellhead pressure of 3,264 kPa (473 psi).
In the central part of Celtic's Resthaven land block, the Company completed a horizontal well located at 15-31-060-02W6 (100% WI) in the Upper Middle Montney formation. The well was drilled to a measured depth of 5,066 meters and was completed with a 14 stage foam fracture technique. At the end of the test, the well was flowing natural gas at a rate of 14.3 MMCF per day and field condensate of 241 barrels per day (2,624 BOE per day combined, before plant shrinkage and before NGL extraction), at a flowing wellhead pressure of 12,285 kPa (1,782 psi).
The Company currently has four rigs operating at Resthaven drilling horizontal wells located at 04-34-061-03W6, 04-11-062-27W5, 01-03-060-01W6 and at 12-20-058-27W5. Celtic has a 100% WI in all four of these wells. The wells at Resthaven are expected to produce associated liquids at a rate of 40 to 50 barrels per MMCF, including condensate production. However, these rates would be higher if the natural gas is processed at a deep-cut gas plant. The majority of wells drilled to date at Resthaven are expected to be tied-in to the Keyera operated Simonette Gas Plant by October 2011. The operator, Keyera, has indicated its intention to add a turbo expander to the plant giving it deep-cut capability.
Celtic has increased its land holdings at Resthaven, recently adding lands from Crown sales in and around recent well successes. Currently, the Company owns Montney rights in 414,730 gross acres and 402,846 net acres (629 sections).
At Inga, in north-east British Columbia, the Company participated in the drilling and completion of a horizontal well located at 04-36-087-23W6 (40% WI), in the Doig formation. The well was drilled with a 665 meter horizontal lateral and was completed with a 7-stage hydrocarbon fracture technique. After a five day test, the well was producing oil at a rate of 1,070 barrels per day and natural gas at a rate of 3.5 MMCF per day (1,650 BOE per day combined), at a flowing wellhead pressure of 12,627 kPa (1,830 psi). This well was drilled as part of a third-party farm-in, earning Celtic and its partner three sections of land with the potential for follow-up drill locations.
The Company is currently participating in the drilling of a horizontal well located at 01-33-087-23W6 (40% WI) and expects to follow-up with another horizontal well located at 10-34-087-23W6 (40% WI). In addition, Celtic participated in the recent acquisition of approximately 313 km² of 3-D seismic data to further expand the play.
Celtic's Board of Directors has approved a $30.0 million increase to the Company's 2011 capital expenditure budget. The budget has been increased from $240.0 million, after dispositions, to $270.0 million. The increases are $15.0 million for facilities, equipment and pipelines; $12.0 million for land and seismic; and $3.0 million for reduced proceeds from dispositions. The Company expects to spend $206.5 million on drilling and completing wells, $55.5 million on facilities, equipment and pipelines, and $25.0 million on land and seismic. In addition, proceeds from asset dispositions in the amount of $17.0 million will reduce gross capital expenditures.
Celtic is excited about the growth prospects being generated in the Company and remains optimistic about the Company's ability to deliver continued per share growth in production, reserves, net asset value and funds from operations. Given the Company's strong inventory of drilling locations, we look forward to continued growth in 2011 and beyond.
The information set out herein under the heading "Capital Expenditures" is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Celtic's reasonable expectations as to the anticipated results of its proposed business activities for 2011. Readers are cautioned that this financial outlook may not be appropriate for other purposes.
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