Burmis Energy Inc.

Burmis Energy Inc.

November 03, 2005 09:00 ET

Burmis Energy Announces $35 Million Capital Budget and Guidance for 2006, and Updates Activities

CALGARY, ALBERTA--(CCNMatthews - Nov. 3, 2005) - Burmis Energy Inc. (TSX:BME) ("Burmis") is pleased to provide an update on its operating activities and announce that its Board of Directors has approved a $35 million capital budget for 2006.

2006 Capital Budget and Guidance

The Company's 2006 capital program will allow Burmis to participate in approximately 31 gross (16.7 net) wells in 2006. Funds will be directed at the ongoing development of the Company's Pembina property, participation in several Nisku exploration and development wells in the Brazeau and Easyford areas, expansion and downspacing of the Company's shallow gas properties in west central Alberta, medium depth gas drilling at Ferrier, and commencement of drilling in two new exploration areas in west central Alberta. Approximately 18 percent of the 2006 budget will be directed towards land acquisition and seismic programs to facilitate future growth.

The Company is forecasting funds flow from operations to range between $31.4 million and $34.5 million ($0.92 per share to $1.00 per share) for 2006 based on estimated average production of 2,800 barrels of oil equivalent per day comprised of 12.0 million cubic feet per day of natural gas and 800 barrels per day of oil and NGL's. This guidance is based on estimated crude oil prices of US $55 to $58 per barrel for West Texas Intermediate, natural gas prices of $8.75 to $9.50 per mcf, and an exchange rate of $0.85 Canadian per United States dollar. Net debt to funds flow is projected to be in the range of 0.2 to 0.4 times funds flow throughout 2006.

Activity Update

In the first nine months of 2005, Burmis drilled 30 gross (13.0 net) wells, of which 22 gross (9.2 net) were cased as gas wells, four (2.4 net) were cased as oil wells, two (0.2 net) were cased as service wells and two (1.2 net) were dry and abandoned. This has resulted in a nine-month drilling success rate of 91 percent, excluding the two service wells which are water source and water injection wells drilled for the Pembina Nisku GG pool water injection project.

Burmis expects to participate in 15 gross (6.3 net) wells in the fourth quarter of this year. Five (1.5 net) of these wells have already been drilled and cased boosting the Company's year to date drilling success to 92 percent.

At Pembina, Burmis has drilled four gross (0.8 net) wells to date in the fourth quarter, all of which were cased. With these new wells, Burmis currently has approximately 700 barrels of oil equivalent of shut-in production behind pipe awaiting start-up of the Pembina 4-8-47-9W5 gas plant. This 30 million cubic foot per day gas plant, in which Burmis has a 15 percent ownership position, will provide Burmis with net gas processing capacity of 4.5 million cubic feet per day. Natural gas liquid recovery from this facility is expected to be approximately 55 barrels per million cubic feet of natural gas. The plant is scheduled to commence operations in mid-January 2006, providing a significant increase to Burmis' production volumes to approximately 2,700 barrels of oil equivalent per day. Upon start-up of the gas plant, Burmis will benefit from a reduction in operating costs in the Pembina area to approximately $3.00 per barrel of oil equivalent. At that time, the Pembina area will generate approximately 40 percent of the Company's production.

At Ferrier, Burmis has recently drilled and cased a 65 percent working interest well. This well is being completed for natural gas in the Cardium zone. If successful, the well is expected to be placed on production by mid-November.

During the remainder of the fourth quarter, Burmis has six gross (1.3 net) locations scheduled for drilling at Pembina, as well as two locations at each of Hoadley (2.0 net) and Kehiwin (1.5 net) targeting shallow natural gas.

Burmis is increasing its cash flow guidance for 2005 from $19.1 million ($0.61 per common share) to $20.0 million ($0.63 per common share) based on the current outlook for prices over the remainder of 2005. The Company expects annual production to average approximately 1,800 barrels of oil equivalent per day in 2005. The average production rate is lower than expected due to existing gas plant constraints at Pembina, gas gathering system constraints at Hoadley, and unplanned maintenance outages at Easyford, Brazeau and Kehiwin. Additionally, a development Nisku well at Easyford which had been included in the Company's 2005 capital program has been delayed until 2006 due to changes in the licensing procedures for sour solution gas wells in this area.

Burmis is a junior Canadian exploration, development and production company which has focussed its operations in west central Alberta. The common shares of Burmis trade on the Toronto Stock Exchange under the symbol "BME".

ADVISORY - Certain information regarding Burmis set forth in this document, including management's assessment of the Company's future plans and operation,s may constitute forward-looking statements under applicable securities law. By their nature, forward-looking statements necessarily involve risks associated with oil and gas exploration, production, marketing, and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of forward-looking information and statements, although considered reasonable at the time may prove to be imprecise. As such, undue reliance should not be placed on forward-looking statements. Burmis' actual results and performance could differ materially from those expressed in or implied by those forward-looking statements. Accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will occur, or if they do occur, what benefit Burmis will derive therefrom.

Contact Information

  • Burmis Energy Inc.
    Mr. Aidan M. Walsh, P.Eng., MBA
    President and Chief Executive Officer
    (403) 781-7284
    (403) 261-9028 (FAX)
    Burmis Energy Inc.
    Mr. Scott R. Dyck, CA
    Chief Financial Officer
    (403) 781-7217
    (403) 261-9028 (FAX)
    Email: ir@burmisenergy.ca
    Website: www.burmisenergy.ca