Bronco Energy Ltd.

Bronco Energy Ltd.

December 01, 2008 08:41 ET

Bronco Announces Wabiskaw Production Update

CALGARY, ALBERTA--(Marketwire - Dec. 1, 2008) - Bronco Energy Ltd. ("Bronco" or the "Company") (TSX:BCF) is pleased to announce recent significant increases in production from its Upper Wabiskaw heavy oil field at Wabasca, Alberta. The impact of higher production levels improves the financial stability of the Company during these economically challenging times.

Bronco's production team is focused on well optimization efforts and building on the recent production results outlined below:

- The past seven day sales production average is approximately 2,112 boe/d (comprised of 1935 bopd and 1061 mcf/d). Stabilized production is trending upward in conjunction with higher oil cuts on several additional wells brought on to production since the mid-October commissioning of the Free Water Knock Out vessel;

- Increased fluid handling capacity, larger water disposal volumes with two operating disposal wells and improved facility operating uptime have allowed operators to become more aggressive with well optimization efforts in terms of both the number of wells running and pumping speeds. The current producing well count is approximately 45, with a growing number of wells contributing to the current production level;

- Increased fluid levels and improving oil cuts are being observed throughout the field. This includes new production contributions from the 6-30 and 12-30 pads, located on the southern portion of Bronco's East Block Wabiskaw development area, that have only been on production since November 10, 2008;

- Operating cost improvements are also being realized: less condensate, as a percentage of sales volumes, is being used for blending; the majority of producing wells are now electrified; the battery is now powered by fuel gas; and fixed operating costs are being spread across larger production volumes, resulting in overall lower per boe unit operating costs.

Initial production has also commenced from Bronco's first Middle Wabiskaw horizontal well. The 103/12-25-79-23W4M well is the first known horizontal test well drilled into this zone in the Pelican Lake area. The well has been on production for approximately 17 days. Over the past week, two tests have indicated that production levels on the well are approximately 88 bopd with an oil cut of 70%. Bronco's mapping indicates that this zone is prospective on up to 17 sections in close proximity to its battery and treating facilities. The Middle Wabiskaw zone has similar reservoir properties to that of the Upper Wabiskaw and could be developed in a similar manner, including long term enhanced oil recovery utilizing polymer waterflood. Development of the Middle Wabiskaw would also realize capital cost efficiencies as future drilling into this zone could be accessed from existing pads and utilize existing pipeline and facilities infrastructure. Development plans for this zone are pending upon obtaining additional production history and data on the well.

Mr. Brian Alford, President and CEO of Bronco, commented, "The increases in production and Middle Wabiskaw heavy oil tests are encouraging results for Bronco. While the current economic challenges seem daunting, the Company's balance sheet and recent facilities and infrastructure enhancements are anticipated to allow for continued production growth as oil wells continue to be optimized."

Of note, the Company also advises that Mr. Alford recently disposed of a nominal portion of his Bronco shares to cover a fraction of the tax liability created by his exercise of certain options that expired in June 2008. Several other insiders purchased Bronco shares during the same time period.

Bronco also announces that it's wholly owned subsidiary, Bronco Drilling Services Ltd., has entered into a minimum 120 day contract for its telescopic double Rig#1 with a major producer to drill in the Wabasca area commencing in January 2009. This will provide additional near term working capital resources that will be available for Bronco's Wabiskaw development plans.

Bronco is continuing to evaluate its 2009 capital expenditure plans in light of the current high global market volatility, and expects to provide an update on its plans prior to year end.

Forward-Looking Information

Certain statements contained in this document constitute forward-looking statements (the "forward-looking statements"). These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "budget", "plan", "guidance", "continue", "estimate", "expect", "forecast", "may", "will", "project", "potential", "target", "intend", "could", "might", "should", "believe" and similar expressions. In particular, forward-looking statements include, but are not limited to, statements with respect to: drilling inventory, drilling plans and timing of drilling, re-completion and tie-in of wells; plans for facilities construction and performance, completion timing and method of funding thereof; productive capacity of wells, anticipated or expected production rates and anticipated dates of commencement of production; drilling, completion and facilities costs; results of our various projects; our ability to lower cost structure in certain projects, our growth expectations; timing of development of undeveloped reserves; the performance characteristics of our oil and natural gas properties; oil and natural gas production levels; the size and quantity of the oil and natural gas reserves; projections of market prices and costs; supply and demand for oil and natural gas and commodity prices; expectations regarding the ability to raise capital and to continually add to reserves through acquisitions, exploration and development; treatment under governmental regulatory regimes and tax laws; our tax horizon; expected levels of royalty rates, operating costs, general administrative costs, costs of services and other costs and expenses; and realization of the anticipated benefits of acquisitions and dispositions. Statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment that, based on certain estimates and assumptions, the resources and reserves described can be profitably produced in the future.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, level of activity, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements and information.

With respect to the forward-looking statements, we have made assumptions regarding, among other things: future performance of our facilities, including the battery; completion of the battery expansion as planned; future performance of our drilling rigs and our ability to obtain additional equipment in a timely manner, if and as required; the impact of increasing competition for transportation capacity and supplies; future oil and natural gas production levels from our current and new wells; our ability to market our oil successfully; future capital expenditure levels; future prices and differentials between light, medium and heavy oil prices; and our ability to obtain financing on acceptable terms as required.

Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking statements include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, including fluctuations in the prices of oil and natural gas; governmental regulation of the oil and gas industry, including environmental regulation; geological, technical, drilling and processing problems and other difficulties in producing reserves; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; failure of the oil processing battery to operate at the expected capacity before and after planned expansion thereof; failure to install pipeline facilities as and when expected; failure to obtain industry partner and other third party consents and approvals, when required; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; incorrect assessments of the value of acquisitions; geological, technical, drilling, processing and transportation problems; changes in tax laws and incentive programs relating to the oil and gas industry; failure to realize the anticipated benefits of acquisitions and dispositions; and the other factors described in our public filings (including our Annual Information Form) available at Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this document are expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking statement to conform such statement to actual results or to changes in our expectations except as otherwise required by applicable securities legislation.

Disclosure provided herein in respect of boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information

  • Bronco Energy Ltd.
    Brian Alford
    President and CEO
    (403) 699-8383
    Bronco Energy Ltd.
    David Johnson
    VP Finance and CFO
    (403) 693-0038