(TSX-PGX.UN)
CALGARY, Sept. 10 /CNW/ - (TSX-PGX.UN) - Progress Energy ("Progress" or the "Company") provides fall operational update. Progress expects 2008 production to average approximately 24,500 barrels of oil equivalent ("boe") per day while investing approximately $140 million on land, seismic, drilling and facilities, before acquisition and divestiture activities. Current production is in the range of 25,500 boe per day. To date in the third quarter, Progress has drilled 10.0 net wells.
Deep Basin - Northwest Alberta
The Company's Deep Basin region continues to generate strong results including very positive results from its Gold Creek project area. Overall production in the Deep Basin has increased by 10 percent to over 12,500 barrels of oil equivalent ("boe") per day over the past year as a result of the Company's successful drilling program. During that time, the Company has drilled 24 net wells with a 99 percent success rate.
The property experiencing the greatest growth is the Gold Creek project area which covers over ten townships immediately south of the city of Grande Prairie. Since 2004, Progress has drilled 46 net wells with initial production rates averaging 1.8 million cubic feet per day and reserve bookings averaging 1.7 billion cubic feet per well. These wells are typically completed in up to three zones and cost approximately $2 million to drill, complete and tie-in.
The Gold Creek area is characterized by its multi-zone, stacked Cretaceous sands. Progress has historically operated an average of one to two rigs on its Deep Basin properties throughout the year, consistent with its sustainability strategy which focuses on a pace of drilling to optimize existing gathering, pipeline and compression facilities. At its current pace, the Company has an inventory of drilling locations in excess of five years.
During the past year, Progress successfully co-developed new completions technologies which are being applied to unlock previously bypassed zones. With this knowledge, Progress has been aggressively acquiring land through crown land sales and farm-ins. The Company also controls gathering infrastructure and owns an interest in the Gold Creek, Karr and Wapiti gas plants which provide access to over 600 million cubic feet per day of processing capacity.
Progress maintains a strong focus on all cost aspects of its program to generate strong economic returns. The Company's Deep Basin program generates a pre-tax rate of return of 55 percent using $7.50 per gigajoule AECO gas price and the new royalty regime being implemented in 2009.
Foothills - Northeast British Columbia
The Halfway formation is the Company's primary target in the Foothills of northeast British Columbia. It is a thick sandstone reservoir that is pervasive over several hundred square kilometers in Progress' operating area. The reservoir, at approximately 1,800 meters depth, has been penetrated 150 times vertically, and almost exclusively on the crests of the anticlines, by Progress and its working interest partner, ProEx Energy, during the past seven years. Advances in horizontal drilling and completions technologies have created the opportunity to investigate full scale development and delineation of previously discovered Halfway pools. This will include drilling of both mid and lower grade reservoirs positioned on crests and flanks of known anticlines as well as accessing reservoirs in areas where surface topography is not conducive to conventional operations.
To date, Progress has completed its first multi-stage fracture stimulation on an existing horizontal well at Bubbles (60% WI) and has drilled, and is currently completing, its first grass roots horizontal well at Dogrib (20% WI). An additional three to four Halfway horizontal wells are expected to be drilled prior to year-end utilizing multiple limited-entry fracture techniques for completion.
The well completed at Bubbles, was originally drilled in 1999 and flowed minimal gas on test from the Halfway, is now flowing at 2.2 million cubic feet per day at high flowing pressures since being tied-in two weeks ago. The approximate 750 meter horizontal portion was completed with six separate fracture stimulations, tested and then tied-in into the Company's production facilities. More recently, in a tighter portion of the Dogrib Halfway pool, a well with a 1,000 meter horizontal section was successfully drilled and is currently being prepared for a multi-stage completion.
Growing land inventory
To date in the third quarter, Progress has acquired 25,500 net undeveloped acres of land through a series of crown land sales, acquisitions and farm-ins. The acquired lands are contiguous with existing Progress lands in the Deep Basin and Foothills. In aggregate, Progress holds over 600,000 acres of undeveloped land.
Risk Management
Progress maintains a consistent price risk management program to mitigate price risk volatility and provide greater certainty of its revenue stream. For the period from April 1, 2008 to October 31, 2008, the Company has hedges on approximately 70 million cubic feet ("mmcf") per day at a net floor price of $7.77 per mcf and a net ceiling of $8.62 per mcf. For the period from November 1, 2008 to March 31, 2009, the Company has hedges on approximately 30 mcf per day at a net floor price of $10.44 per mcf and a net ceiling of $13.85 per mcf.
Progress is a Calgary based, natural gas focused company targeting growth in production and reserves per unit through the utilization of its technical capability and capital investment efficiencies. Primary operating areas include the Deep Basin of northwest Alberta and the Foothills and Plains regions of northeast British Columbia. Units of Progress trade on the Toronto Stock Exchange (TSX) under the symbol PGX.UN. Exchangeable Shares of Progress Energy Ltd. trade on the TSX under the symbol PGE and its convertible debentures trade on the TSX under the symbols PGX.DB and PGX.DB.A.
Forward-Looking Statements - Certain information regarding Progress set forth in this document, including management's assessment of Progress' future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties. In particular, forward-looking statements included in this document, include but are not limited to, statements with respect to levels of distributions to be paid to unitholders and timing of payment of such distributions. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Progress' control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Progress' actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Progress will derive therefrom. These forward-looking statements are made as of the date of this Document and Progress does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
ContactsMr. Michael Culbert
President & Chief Executive Officer
Phone: (403) 539-1820
Progress Energy Ltd.
1200
205 - 5th Avenue S.W.
Calgary
Alberta
T2P 2V7 Mr. Greg Kist
Vice President
Investor Relations & Marketing
Phone: (403) 539-1809
Toll Free: 1-866-216-2510
Fax: (403) 216-2514
Email ir@progressenergy.com
Web: www.progressenergy.com
864.41 (9.32%)
