Cinch Energy has provided an update on its activities in the Dawson Area, of British Columbia.
The Company brought on production the Dawson 6-6 Wabamun well (85% working interest) on March 22, 2009. The well is currently producing at an average restricted rate of 5.0 mmcf/d, which is less than the wells productive capacity but production is currently being restricted due to pipeline capacity. As a result of this well, Cinch's current production has increased to approximately 2800 boepd. Cinch has been successful in diversifying its production base whereby 60% of the current Corporate production comes from British Columbia.
Cinch continues to complete vertical wells to reduce the risk in the Montney horizon in its core Dawson area, located between the Storm Parkland pool and the Arc Dawson pool. Currently, Cinch has an interest in 61 sections in the Dawson area including an average working interest of approximately 33% in 26 sections where Montney mineral rights are held. To date, Cinch and its partners have completed 4 vertical Montney tests between the Parkland and Dawson Montney pools. Cinch is currently reviewing alternatives to bringing its Montney gas on production.
The Dawson 11-26 well (65% working interest) was drilled and cased to the PreCambrian zone at 3841 meters. This well was initially completed in the Wabamun with marginal results and was subsequently vertically completed in the shallower Montney zone. By completing the Montney zone, Cinch earned a 32.5% working interest in the section. The Montney zone was flow tested over a 3.5 day period at a stable rate of approximately 2 mmcf/d.
The Dawson 10-15 well (26% working interest) was cased to the Kiskatinaw formation. The Kiskatinaw completion was unsuccessful and the well was subsequently vertically completed in the Montney zone. The natural gas rate after a 5 day flow period was approximately 600 mcf/d.
The Company has completed its annual line of credit review with its lender. The Company's line of credit has been increased from $40 million to $43 million. Current net debt is estimated at $36 million, which is projected to remain fairly constant through 2009 with the Company projecting capital expenditures to match 2009 estimated cash flow. Cinch's 2009 capital budget remains at $15 million but is reliant on higher commodity prices in the latter part of the year. The capital budget is being closely monitored and will be adjusted accordingly with any further movements in commodity prices.
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