PetroBakken Energy announced the Company's year-end reserves and provide an operational update.
(Annual comparisons are 2009 compared to 2008 and quarterly comparisons are fourth quarter 2009 compared to the fourth quarter of 2008. All references to $ are Canadian dollars unless otherwise noted.)
Sproule Associates Limited completed their evaluation of PetroBakken's reserves, dated March 1, 2010, effective as at December 31, 2009 ("Sproule Evaluation"). All reserves are based on forecast prices and costs and are Company gross reserves.
2009 was a very active year for PetroBakken in both organic activity and acquisitions and divestitures. PetroBakken was created through the spin out of Petrobank's Canadian Business Unit, followed by the acquisition of TriStar. Prior to TriStar being acquired by PetroBakken, TriStar had completed a significant transaction on March 31, 2009 when it acquired 50% of Talisman's southeast Saskatchewan assets. In December 2009, PetroBakken sold certain assets in the Ante Creek area of Alberta. The Sproule Evaluation reflects the impact of these acquisitions and divestitures.
PetroBakken achieved record results in 2009 with significant increases in high netback reserves and production. PetroBakken's 2009 average production increased 47% to 26,333 boepd from 17,775 boepd in 2008. In the fourth quarter, PetroBakken production averaged 45,621 boepd, an increase of 105% over the fourth quarter of 2008. In December, 2009, Company production averaged 45,900 boepd, of which 38,200 boepd was produced from our core properties in southeast Saskatchewan and British Columbia. Average January production is estimated at approximately 43,600 boepd, after the disposition in December 2009 of approximately 2,000 boepd.
PetroBakken drilled 157 gross wells (152 oil wells, 3 gas wells and 2 dry & abandoned ("D&A") wells) and 117.3 net wells (113.3 oil, 2.5 gas and 1.5 D&A) in 2009. All of these oil wells were in southeast Saskatchewan, while all of these gas wells were in the Monias and Horn River unconventional gas plays in northeast British Columbia.
PetroBakken currently has 12 rigs drilling in southeast Saskatchewan, 10 rigs working in the Bakken, and two rigs in our conventional Mississippian plays. PetroBakken will continue to develop infrastructure in this area and we plan to build two more major oil batteries and expand the existing Midale gas plant from 8 mmscfd to 13 mmscfd to handle the additional solution gas volumes.
In northeast British Columbia PetroBakken has successfully drilled, completed and tied in a Muskwa shale gas well in the Horn River basin. The well is on production and we are evaluating its performance for future drilling opportunities in the area. At Monias, PetroBakken drilled and is completing a Montney gas well. The well was drilled as a long bilateral horizontal well. The first leg has been production tested at initial production rates in excess of 6 mmscfd. The second leg is presently being fracture stimulated. We anticipate placing this well back on production in March 2010.
Our business plan continues to be focussed on developing and expanding our inventory of light oil locations. Following spring break-up, our 2010 drilling program will be re-aligned to take advantage of our expanded drilling inventory in the Cardium play of Alberta. Current plans anticipate an eight to ten rig program in the Bakken and conventional plays of southeast Saskatchewan and six drilling rigs operating in the Cardium.
BILATERAL HORIZONTAL WELL UPDATE
In July 2009, PetroBakken initiated a bilateral horizontal well drilling program in southeast Saskatchewan to increase pay contact and fracture density in the Bakken formation. To-date, PetroBakken has drilled 65 long bilateral horizontal wells with more than 50 wells now on production. Performance from these wells has been very encouraging with an average production performance increase of greater than 50% when compared to the single leg horizontal wells offsetting these bilateral horizontal wells.
The use of the bilateral horizontal well technology is another example of how PetroBakken has been, and continues to be, at the forefront of adopting new technologies to exploit both conventional and unconventional resources. PetroBakken will continue to refine these recovery methods, and adopt new ones as they are encountered, in the Bakken and other unconventional reservoirs.
During the first quarter of 2010, PetroBakken has completed two asset package dispositions and anticipates closing a further two asset dispositions representing approximately 3,800 boepd. Including assets sold prior to year end, we anticipate selling a total of 5,800 boepd for gross proceeds of approximately $315 million.
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