CALGARY, ALBERTA--(Marketwire - Jan. 31, 2013) - Crocotta Energy Inc. ("Crocotta" or the "Company") (TSX:CTA) is pleased to announce 2013 Guidance and Operations Update.
Crocotta has grown organically from 2,200 boepd at the start of 2010 to over 8,500 boepd solely by drilling its current Bluesky and Cardium projects at Edson and its Montney project at Dawson. Average capital efficiency for the projects (on-stream cost divided by year #1 average production) has been less than $15,000 per boepd with finding and development costs on a corporate level averaging $12 per boe. Returns on the liquids-rich Bluesky and Montney are over 100% with paybacks of approximately 1 year and the Cardium oil project at Edson exceeds these metrics. Although these combined projects average 65% gas and 35% liquids, returns rival pure oil plays as a result of low operating costs ($5 per boe), high productivity, large recoverable reserves, and reduced on-stream costs which are, in part, a result of Crocotta's drilling and completion efficiencies gained over prior periods. Crocotta's 2013 budget will focus on these 3 development plays.
CAPITAL PROGRAM AND GUIDANCE
Crocotta has approved a budget that entails spending approximately $100 million in 2013 with the focus on Cardium oil at Edson, Bluesky liquids-rich gas at Edson, and Montney liquids-rich gas at Dawson. The budget will be spent equally between the first and second half of the year and be flexible to allow Crocotta to maintain its strong financial position. In addition, such flexibility will allow Crocotta to maximize returns by being able re-allocate between projects based on relative success as well as react to short to medium term fluctuations in commodity prices.
Crocotta estimates average 2013 production to be between 9,200 and 9,500 boepd (35% oil and natural gas liquids and 65% natural gas) with exit 2013 production reaching 10,500 boepd.
Edson will receive approximately 60% of the overall budget with almost half of the entire year budget to be spent on horizontal development of Cardium oil. Crocotta has budgeted to drill 14 net horizontal Cardium oil wells and 2.2 net liquids-rich Bluesky gas wells. Liquids-rich Montney will receive approximately 30% of the budget with its new sweet gas plant constructed in the first half of the year and 4 net horizontal wells scheduled to be drilled in the second half of the year. New projects and land will receive the balance of the allocated capital.
Crocotta currently has two drilling rigs in operation at Edson with one drilling Cardium horizontals and one drilling Bluesky horizontals. Crocotta is currently completing 1(0.6 net) previously drilled Bluesky wells and 2 (2.0 net) Cardium wells at Edson. Production rates of the wells and commentary on the overall program will be released in future operations updates.
Crocotta exited 2012 with approximately $80 million of net debt compared to its current bank credit facility of $140 million. The 2013 budget allows Crocotta to maintain its strong financial position.
Crocotta is well positioned to show accelerated and material growth through the exploitation of its large proven resource base at Edson and in the Montney and has significant financial flexibility to react to opportunities as they arise.
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "should", "believe", "intends", "forecast", "plans", "guidance" and similar expressions are intended to identify forward-looking statements or information.
More particularly and without limitation, this document contains forward looking statements and information relating to the Company's oil, NGLs and natural gas production and capital programs. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company, including expectations and assumptions relating to prevailing commodity prices and exchange rates, applicable royalty rates and tax laws, future well production rates, the performance of existing wells, the success of drilling new wells, the availability of capital to undertake planned activities and the availability and cost of labour and services.
Although the Company believes that the expectations reflected in such forward-looking statements and information are reasonable, it can give no assurance that such expectations will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as 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 estimates and projections relating to production rates, costs and expenses, commodity price and exchange rate fluctuations, marketing and transportation, environmental risks, competition, the ability to access sufficient capital from internal and external sources and changes in tax, royalty and environmental legislation. The forward-looking statements and information contained in this document are made as of the date hereof for the purpose of providing the readers with the Company's expectations for the coming year. The forward-looking statements and information may not be appropriate for other purposes. The Company 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.
Barrels of oil equivalent ("boe") 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.