Breaker Energy Ltd. ("Breaker" or "Company") (TSX: wav) is pleased to provide initial flow test information from its second horizontal multi-frac well at its wholly-owned Doig/Montney gas resource property in Fireweed, British Columbia. The new well was drilled approximately two miles north of Breaker's highly successful first Fireweed multi-frac horizontal.
Successfully treated with eight fracs in mid-March, the well flowed to Breaker's compressor station since the morning of March 31, 2009. Field measurements recorded that the well flowed at an average rate totalling approximately 1,003 boe/d (which includes approximately 5.3 mmcf/d of natural gas and approximately 120 bbls/d of natural gas liquids) for the last 24 hours of the test ending the morning of April 3, 2009.
The quoted gas rates are measured raw at the wellhead and include approximately three percent carbon dioxide and 2.5 percent hydrogen sulphide. This well was drilled in the north end of the property where wells historically produced at lower rates. Breaker is pleased with the results, as the well has also confirmed gas saturation in previously untested sands.
After two months of high-rate production, Breaker's first horizontal multi-frac well at Fireweed continues to produce at high rates. In only two months, the well produced approximately 77.6 mboe of cumulative production and exited March with a raw production rate of approximately 1,000 boe/d. Breaker notes that this well's decline rate has started to flatten which is consistent with the Company's interpretation that the well has tapped into a large resource. From its field production estimates and internal benchmarking studies based on public production data, Breaker believes that this well's first-month daily average production of approximately 1,540 boe/d is superior to all known horizontal wells in analogous deep basin Montney reservoirs. This benchmarking data set includes 181 producing horizontal wells drilled since January 2006 with public production data available up to year-end 2008.
Both horizontal wells measured initial bottom hole pressures exceeding 16 MPa at a true vertical depth of approximately 1,645 metres, indicating only a small amount of drainage to date from legacy production of over 20 vertical wells and cumulative production to date of over 17 bcf.
With Breaker's facility modifications essentially complete, the Company anticipates total production rates from the Fireweed property of approximately 2,500 boe/d early in April, nearly triple the production rate when Breaker acquired the property less than one year ago. Due to the high pressure and flow rates of Breaker's two new horizontal wells, much of Breaker's pre-existing Fireweed production of approximately 750 boe/d will continue to be curtailed pending completion of the pipeline gathering system looping project planned for the second half of 2009. This project will further enhance the production capability from all wells and accommodate growing volumes in the area.
In addition to the value of the natural gas liquids produced at Fireweed, the high heat content of the gas enables Breaker's Fireweed gas production to obtain a significantly higher sales price per mcf than typical dry gas.
This ongoing success confirms the potential of the Fireweed high rate, liquids rich resource play. Currently, Breaker has identified 14 additional drilling locations at Fireweed and the Company's total horizontal multi-frac resource play inventory is now approximately 160 potential new locations. The resource play areas include Fireweed, Irricana light oil, and Provost sweet gas.
Breaker has started to take advantage of the Alberta Government's new royalty incentive programs in other areas. Breaker delayed the tie-in of more than one mmcf/d until April in its greater East Prairie area to ensure an initial crown royalty rate of five percent and will spud a well in its Medicine Hat area in early April to obtain both the drilling depth royalty credit and the five percent initial royalty rate. Breaker has obtained cost savings in all recent projects compared with prior quarters and remains focused on finding further operational efficiencies.
The Company will continue to be flexible in its capital spending in order to respond to changes in royalties, commodity prices, costs and capital markets. Breaker has a large portfolio of low risk light oil and natural gas drilling locations with spacing approvals in hand. The Company's current production mix (which includes a significant liquids weighting, including a large amount of light oil) allows for high netbacks and significant cash flow at current commodity prices.
Breaker Energy Ltd. is a junior oil and gas company focused on creating shareholder value by growing per share production and reserves through acquisitions and a focused exploration, development and exploitation plan.
Breaker trades on the TSX under the symbol WAV.
Breaker has 46.0 million Class A Shares and 4.0 million Options outstanding as at April 6, 2009.
Forward-looking Statements
This press release contains forward-looking statements concerning anticipated: (i) capital expenditures for 2009, (ii) exploration and development activities, (iii) production at Fireweed, (iv) gathering system modifications, and (v) effects on Breaker of the Alberta Royalty Regime.
Although Breaker believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Breaker can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Breaker's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and Breaker undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Note: Boe means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Boe/d means barrel of oil equivalent per day.
In this press release: (i) boe/d means boe per day, (ii) mcf means thousand cubic feet, (iii) mmcf means million cubic feet, (iv) mmcf/d means million cubic feet per day, (v) bbls means barrels of oil, (vi) bbls/d means barrels per day, (vii) mboe means thousand barrels of oil equivalent (viii) MPa means million pascals, and (ix) bcf means billion cubic feet.
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%SEDAR: 00021180E
SOURCE: Breaker Energy Ltd.
Dan O'Neil, President & Chief Executive Officer, (403) 215-5264; or Max Lof, Vice President, Finance & Chief Financial Officer, (403) 215-5264, This email address is being protected from spambots. You need JavaScript enabled to view it., www.breakerenergy.com