Altura Energy Inc. ("Altura" or the "Corporation") (TSX Venture: ATU) is pleased to announce its financial and operating results for the three months ended March 31, 2017. The unaudited interim condensed consolidated financial statements, and related management's discussion and analysis ("MD&A") will be available at www.sedar.com and www.alturaenergy.ca.
FIRST QUARTER 2017 HIGHLIGHTS
Altura achieved first quarter production of 1,015 boe per day, up 27 boe per day (3 percent per share) from the fourth quarter of 2016 and up 610 boe per day (151 percent per share) from the first quarter of 2016. Altura drilled six horizontal wells in the quarter, including one Rex oil well at Leduc-Woodbend, three Sparky oil wells at Eyehill, one Rex oil well at Killam, and one Sparky oil well in the Macklin area on the Saskatchewan side of the border. The Leduc-Woodbend well was completed and brought on production on March 28, 2017 and although initial rates exceeded expectations the well's four producing days did not have a significant impact on production in the quarter. The remaining five wells were completed and brought on production in late April and will impact production in the second quarter of 2017.
Altura generated funds from operations of $2.3 million, up six percent from the fourth quarter of 2016 due primarily to decreased general and administrative expenses.
Altura invested $9.0 million on capital expenditures in the first quarter of 2017 including $6.1 million on drilling, completing, workovers, and equipping; $1.4 million on land and other; and $1.5 million on facilities in the Eyehill area to initiate a waterflood pilot in the second half of 2017. Land costs in the first quarter of 2017 were primarily related to Crown land sales and freehold land acquisitions in the Leduc-Woodbend area of Alberta.
The new 102/12-15-049-26W4 ("12-15") horizontal well was drilled in January 2017 into the Upper Mannville Rex oil pool approximately 10 km north of the 100/13-15-048-26W4 ("13-15") horizontal exploration well which was drilled by Altura in August 2016. The 12-15 well was drilled to a true vertical depth of 1,285 meters with a one-mile horizontal leg and was completed with a 31-stage hydraulic fracture stimulation. Altura optimized the completion design for the 12-15 well which eliminated proppant flow-back experienced in the early production stage of the original 13-15 well. Drilling and completion costs are estimated at $2.3 million. Altura expects that drilling and completion costs of $1.8 million will be achieved on subsequent one-mile horizontal wells at Leduc-Woodbend to develop the pool.
The 13-15 well was placed on production on November 22, 2016. The initial production rate over the first 30 producing days was 230 boe per day1 (93% 17° API oil), at an average water cut of 68% and a producing fluid level estimated at 500 meters from surface. Based on field estimates the well is currently producing 130 boe per day (approximately 80% oil) with a rod insert pump, and 72% water cut. The cumulative oil production to May 8, 2017 is approximately 20,000 barrels of oil.
The 12-15 well was placed on production on March 28, 2017. The initial production rate over the first 30 producing days was 177 boe per day1 (92% 17° API oil), at an average water cut of 67% and a producing fluid level at surface. Based on field estimates the well is currently producing 254 boe per day (92% oil) with a rod insert pump, 52% water cut and a producing fluid level at surface. The cumulative oil production to May 8, 2017 is approximately 5,000 barrels of oil.
Altura plans to build, pipeline connect and operate a produced water disposal facility in the second half of 2017 to reduce water trucking and disposal costs associated with pool development and production. In addition to the existing two multi-well pads Altura has constructed, the Corporation will be acquiring another eight multi-well pads to advance from the exploration stage and commercial concept to full field development over the coming months.
The Corporation has now drilled two horizontal oil wells targeting an accumulation that Altura believes to be one of the largest conventional oil pools identified in the Western Canadian Sedimentary Basin within the last 20 years. The Corporation currently has 52 sections of 100% WI land capturing a significant portion of this stratigraphically trapped Upper Mannville pool defined by nearly 700 vertical wellbore penetrations with bypassed pay.
The three Sparky horizontal wells drilled in the first quarter of 2017 commenced production at the end of April and are presently in a clean-up period producing completion fluids. They produce to an existing gathering system and are treated at Altura's recently expanded multi-well oil battery at 13-11-037-03W4. The wells were successfully drilled and completed as one-mile multi-stage horizontal wells consistent with the well design of previous wells in the area.
Drilling and completion costs averaged $870,000 per well which is consistent with 2016 realized costs in this area. Altura continued to improve on its industry leading Upper Mannville drilling efficiencies with a pacesetter well in the Eyehill area that was rig released in under three days, at a measured depth of 2,379 meters.
During the second half of 2017 Altura remains on schedule to implement a waterflood pilot by converting an existing one-mile horizontal well to water injection. This is expected to improve the recovery factor of the offsetting producing wells from 10% to 20% and further reduce operating costs.
During 2016 Altura assembled a 6.5 section 100% WI land position in a 19° API Sparky oil pool that straddles the Alberta-Saskatchewan border at Macklin. There are several vertical wellbores that have been drilled in the pool and in the first quarter of 2017 Altura successfully drilled the first horizontal well in the pool. The well was drilled to a true vertical depth of 725 meters with a one-mile horizontal leg and was completed with a 23-stage hydraulic fracture stimulation in April. The well came on production at the end of April and is presently in a clean-up period producing completion fluids.
The Killam property was acquired by Altura in the third quarter of 2016. In the first quarter of 2017, Altura successfully drilled the Killam 100/15-15-044-013W4 horizontal well which was completed with a 24-stage hydraulic fracture treatment in April. This is the first horizontal well completed with a multi-stage hydraulic fracture stimulation in this 28° API Rex oil pool. All earlier horizontal wells were open-hole completions and not fracture stimulated. The well was brought on production at the end of April and is presently in a clean-up period producing completion fluids.
Through the remainder of 2017, Altura plans to drill five (4.2 net) horizontal wells including one at Killam, one at Leduc-Woodbend and three gross (2.2 net) at Wildmere. The Corporation's 2017 net capital investment program is expected to total $17.7 million with $14.2 million to drill, complete, equip and tie-in a total of 11 gross (10.2 net) wells. The allocation of capital among the Corporation's properties may change depending upon commodity prices, well performance, well economics and strategic objectives.
Assuming $14.2 million of well-related capital, the planned 10.2 net well drilling program is forecasted to add approximately 750 boe per day by December 2017, which delivers a risked capital efficiency of approximately $18,900/boe per day. The incremental production is expected to offset forecast base declines and grow overall production to exit 2017 at a rate of approximately 1,350 boe per day. Capital spending is expected to be funded from cash on hand, cash flow from operating activities and Altura's existing credit facility, if required.
Altura has accumulated a large oil-weighted drilling inventory with exposure to several different plays and continues to pursue conventional crude oil plays in the Western Canadian Sedimentary Basin with a focus in central Alberta targeting the shallow, multi-zone, oil-weighted section of the Upper Mannville Group. This area is expected to generate strong cash netbacks with competitive drilling and completion costs for these shallow targets, thereby delivering attractive economics in the context of the current commodity price environment. To diversify and strengthen the long-term profitability of the Corporation, Altura is also evaluating other oil-prone regions that demonstrate these attributes.
ANNUAL GENERAL MEETING
The Annual General Meeting of shareholders will be held at 10:30 a.m. on Thursday, May 18, 2017 in the Cardium Room at the Calgary Petroleum Club, 319 – 5th Avenue SW, Calgary, Alberta.
ABOUT ALTURA ENERGY INC.
Altura Energy Inc. is a public oil and gas corporation active in the exploration and development of oil and natural gas in east central Alberta.
SOURCE: Altura Energy Inc.
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