Bronco Energy Ltd.
TSX : BCF

Bronco Energy Ltd.

November 12, 2008 19:26 ET

Bronco's Wabiskaw Production Progress and Q3 Results

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2008) - Bronco Energy Ltd. ("Bronco") (TSX:BCF) announces that production from its Upper Wabiskaw heavy oil project continues to improve following the recent start up of its previously announced Free Water Knock Out vessel ("FWKO").

Bronco successfully executed its front end fluid capacity expansion with the installation and commissioning of the FWKO vessel in October, and its implementation has resulted in steady progress at Bronco's oil battery processing facility. Bronco increased its total fluids throughput by approximately 60% in the month of October from the previous month. Subsequent to the commissioning of the FWKO vessel, improved uptimes resulted in an upward trend during the final 10 days of October with average sales production of 1,497 boe per day (comprised of 1,356 bopd and 849 mcf/d). In addition, post FWKO commissioning uptime improved from an average of approximately 36 producing wells (low of 31 wells and high of 41 wells). Most of the oil production came from approximately 15 wells, and all indications confirm the potential for Bronco's previously announced first year average single well guidance of 100 bopd. Continued improvements are anticipated in the near future, the results of which will be announced before the end of the year.

The commencement of trucked water injection into Bronco's previously announced second water disposal well will begin upon receipt of final ERCB approval. Additionally, when routine pipeline regulatory approvals are received, an approximate seven day pipeline installation will be initiated in order to commence continuous injection. These milestones are expected to allow for the continued ramp up of production operations to handle and treat fluids from Bronco's existing inventory of 67 horizontal wells by the end of the year. Currently 57 of the above wells are ready for production, and the ten remaining horizontal wells are being equipped with surface facilities and are expected to be ready for production before the end of the year. Bronco's year end installation target for its second oil treater also remains on track. This installation, together with the above fluid handling improvements, is expected to allow for production from Bronco's full inventory of Wabiskaw horizontal wells, as well as future additional wells in the area.

Bronco's current primary objective is to ramp up near-term production and reserve growth, and its capital program is flexible and can be modified as necessary in light of the current global economic environment. Management is fully committed to aggressively achieving the above objectives, but will do so in a prudent manner that maintains a strong balance sheet and ensures Bronco's ability to continue executing its plans over the long term. In light of the current global credit markets issues and decline in oil prices, the remaining 2008 capital expenditure plans will be focused on facilities to optimize production levels and cash flows from existing wells. This will ensure that sufficient capital resources are reserved for ongoing activities that are critical to the successful increase of production from Bronco's Upper Wabiskaw heavy oil development program. Bronco's 2009 capital expenditure plans are currently being evaluated, and are expected to be announced before the end of the year.

For the nine months ended September 30, 2008 Bronco's capital outlays were $66.3 million, and are primarily attributed to its Upper Wabiskaw horizontal formation drilling program, battery facilities, and related pipelines and gathering systems. Bronco's remaining 2008 capital spending plans call for an estimated additional $7.2 million for the purchase and installation of a second oil treater, as well as the completion, equipping and surface pad facility costs for Bronco's ten recently drilled wells that have not yet been tied in to its battery facility. A small portion of this amount is also allocated to installing pipelines from the battery to the new water disposal well, which is located on a nearby existing production pad of horizontal wells. The pipelines include a pipeline for produced water disposal as well as a pipeline for polymer water injection.

In summary, Bronco is currently focused on the achievement of the following near-term critical milestones:

- stabilized and fully optimized Upper Wabiskaw production levels from Bronco's 67 existing horizontal production wells;

- maintaining a strong balance sheet through continued increases to optimized production levels and cash flows, and minimal capital expenditures focused primarily on production activities; and

- installation and implementation of polymer waterflood in Q3 2009.

Bronco also announces the concurrent filing of its Unaudited Interim Consolidated Financial Statements for the three and nine months ended September 30, 2008, and related Management's Discussion and Analysis with the Canadian securities regulatory authorities on SEDAR in Canada. Electronic copies of the above documents may be obtained on Bronco's SEDAR profile at www.sedar.com or on its website at www.broncoenergy.ca/financial-reports.php.

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; projections of market prices and costs; supply and demand for oil and natural gas and commodity prices; expectations regarding the ability to raise capital, operating costs, general administrative costs, costs of services and other costs and expenses. 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 www.sedar.com. 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
    (403) 693-0038 (FAX)
    or
    Bronco Energy Ltd.
    David Johnson
    VP Finance and CFO
    (403) 699-8383
    (403) 693-0038 (FAX)
    Website: www.broncoenergy.ca