Result Energy Inc. reported that it intends to sell substantially all of its producing assets in Saskatchewan. The properties to be sold include the Company's 50% working interest in a shallow Viking natural gas field (48 wells) and related compression facilities at Dodsland, plus production (1 oil and 6 gas wells) and wellsite facilities at nearby East Dodsland. Current production from these combined properties totals approximately 1,800 mcfd net (300 boed net). The Dodsland properties represent an excellent, mature asset base, consisting of concentrated, predictable reserves characterized by large amounts of remaining gas in place, moderate production volumes and a long reserve life index. Property upside consists primarily of the drilling potential associated with reduced well spacing to improve field recoveries.
Proceeds from the proposed disposition will be applied to the Company's debt including payout of convertible debentures. This reduction in debt will also provide Result with the flexibility to increase its Capex budget for 2008 to approximately $8 million. The increase in capital spending will be directed to new exploration projects at Royce and Eureka in the Peace River Arch, and to the Company's emerging combined shale gas and platform gas play in northeastern British Columbia.
The disposition will remove a mature, development property from Result's portfolio and allow the Company to focus on the substantial upside associated with its Peace River Arch and British Columbia properties.
Production from Result's Saskatchewan properties will effectively be replaced by new wells which are coming on stream in early Q1-08 at Kakwa and Windfall.
Two new gross natural gas wells (0.22 net), which were drilled during 2007 are currently being tied-in at Kakwa, Alberta. Production is expected to commence by the end of January 2008 These wells were completion tested at a combined rate of 8,400 mcfd gross (1,800 mcfd net). Result also holds interests in 4 additional undeveloped sections in the Kakwa project, all of which are prospective for future development drilling.
In mid January, drilling commenced on an exciting 2,900 metre Slave Point gas prospect at Mearon, Alberta. Mearon is located approximately 10 kilometers south of the prolific Ladyfern discovery and immediately north of Result's existing Clearhills project. Result holds a 25% working interest in this prospect. Drilling and testing operations are expected to take approximately four weeks.
To date, Result has acquired mineral rights to 40 gross sections of exploratory acreage (at 100% working interest) that are prospective for Middle Devonian shale gas and platform gas in the Horn River basin of northeastern British Columbia. The Horn River basin has recently seen significant industry land activity for shale gas rights. Result plans to commence an exploration and appraisal program on these lands later this year.
As part of its annual compensation and retention program, Result has today granted a total of 1.24 million options to certain directors, officers, consultants, and employees of the Company. These options will vest over a 2 year period and entitle the holder to acquire common shares of the Company at $0.35 per share for a period of 5 years.
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