Crown Point Energy Inc.
TSX VENTURE : CWV

Crown Point Energy Inc.

January 12, 2015 08:00 ET

Crown Point Provides Positive Preliminary Exploration Results, Updates Operations and Comments on Argentina's Energy Prices

CALGARY, ALBERTA--(Marketwired - Jan. 12, 2015) - Crown Point Energy Inc. (TSX VENTURE:CWV) ("Crown Point" or the "Company") today announced positive preliminary results for the second of two oil and gas exploration wells at its 25.78%-owned Tierra del Fuego ("TDF") concessions in Argentina.

Crown Point also provided other updates, including that its initial TDF exploration well is on production and that drilling has commenced on yet another TDF development well. Further, Crown Point provided a comment on Argentina's domestic oil and natural gas prices.

"With ongoing favourable results from our 14-well exploration, development and recompletion program at our TDF concessions, our confidence continues to strengthen regarding our outlook for TDF production growth in 2015," said Murray McCartney, CEO of Crown Point. "We are also encouraged by Argentina's relatively favourable outlook for natural gas prices and the relatively small price decline for regulated oil prices in January compared with the sharp recent fall in global oil prices."

Preliminary results from the second exploration well

Preliminary testing, together with log and sample analysis, indicates that the second TDF exploration well is a new pool discovery well with hydrocarbon saturation in the Springhill formation. However, fracture stimulation will be required to obtain definitive flow rate information. Fracture stimulation is planned for the first quarter of 2015. As the Springhill formation is a tight formation, fracture stimulation is commonly required to stimulate production. Crown Point anticipates that additional drilling on the structure will be undertaken following fracture stimulation on the discovery well.

The well, called PQ x-1001, is located approximately 5 kilometres from Company-owned gas and oil processing facilities at Rio Chico. PQ x-1001 was completed in two stages during the last 10 days in December. On December 22nd a 6.5 metre interval was perforated to test the basal portion of the Springhill formation. During the following two days the well was swabbed, recovering fluids at an average gross rate of 19.5 barrels per day comprised of a mixture of 50% oil and 50% load fluid. On December 29th, a 5.5 metre interval was perforated to test the upper portion of the Springhill formation. The well subsequently swabbed dry and was shut in for 60 hours, after which completion fluid with oil shows were recovered.

As previously disclosed, PQ x-1001 was drilled to a total depth of 1,939 metres and cased on December 8, 2014 with approximately 14 metres of gross pay in the Springhill sandstones formation. PQ x-1001 was drilled to evaluate the Springhill formation over the 50 square kilometre 3-D seismic mapped Puesto Quince structure.

First exploration well tied in and on stream

The first of the two TDF exploration wells, SL x-1003, was placed on production on December 30, 2014. Test results for this new pool discovery well were announced on December 9, 2014. SL x-1003 is approximately 2.6 kilometres from the Company-owned San Luis gas plant and has been tied in to that plant.

Update on TDF Development Drilling

LF-1029, the sixth well in an eight-well development drilling program, was spudded on January 6th and is currently being drilled. Completion is anticipated by the end of January. LF-1029 is located in the main body of the Los Flamencos gas pool.

LFE 1003, the fifth development well, has been drilled to a total depth of 2139 metres and was cased on December 31 as a potential Springhill formation gas well with approximately 7 metres of gross pay. The well is located on the eastern extension of the Los Flamencos gas field. Completion operations are currently underway with results expected later this month.

LFE 1002, the fourth development well, was tied into production in December. Test results from this well were disclosed in a news release on November 21, 2014.

Update on TDF Recompletions

As previously disclosed, the first two recompleted wells were placed in production in October 2014 after fracture stimulation. Fracture stimulations on the third and fourth wells, both suspended after encountering tight Springhill Formation sands, were unsuccessful.

Argentine Domestic Natural Gas and Oil Prices

Crown Point's price information for the fourth quarter of 2014 is still being finalized but preliminary indications appear to confirm our published expectation that revenue per BOE for the quarter was higher than the $30.45 per BOE earned in the fourth quarter of 2013.

Crown Point believes the long-term outlook for natural gas prices in Argentina remains favourable because, unlike North America, there is not sufficient production in Argentina to meet demand. This is especially important for Crown Point because its production is weighted approximately 80% to natural gas.

As for Argentina's government-regulated oil prices, local benchmark Medanito crude oil has been posted at US$77 per barrel for January, down approximately 8% from US$83.90 per barrel from May 2014 to December 2014.

Oil from Crown Point's TDF concessions, which sells at a discount to Medanito crude, will be priced at approximately US$70 per barrel starting in January 2015, down approximately 9% from US$77 per barrel from May 2014 to December 2014. The decline is relatively small compared with the recent sharp price slump in global crude oil markets and is not expected to have a material impact on our cash flows. The January 2015 price is approximately 40 per cent higher than the closing price on January 9, 2015 of approximately US$50 per barrel for global benchmark Brent crude.

About Crown Point

Crown Point Energy Inc. is an international oil and gas exploration and development company headquartered in Calgary, Canada, incorporated in Alberta, Canada, trading on the TSX Venture Exchange and operating in South America. Crown Point's exploration and development activities are focused in the Austral and Neuquén basins in Argentina. Crown Point has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a basis for future growth.

Advisory

Forward-looking information: Certain information set forth in this document, including: the expectation that the results of the testing program together with log and sample analysis indicate that the Springhill formation in the PQ x-1001 well is hydrocarbon saturated but that the reservoir will require fracture stimulation; the expectation that additional drilling on the structure will be undertaken following fracture stimulation on the PQ x-1001 well and the expected timing thereof; the expected timing for results from the LFE 1003 well; the expected timing of completion of the LF-1029 well; additional details relating to the 14 well program in Tierra del Fuego and the Company's outlook for oil and natural gas prices in Argentina; is considered forward-looking information, and necessarily involve risks and uncertainties, certain of which are beyond our control. Such risks include but are not limited to: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; risks associated with operating in Argentina, including risks of changing government regulations (including the adoption of, amendments to, or the cancellation of government incentive programs or other laws and regulations relating to commodity prices, taxation, currency controls and export restrictions, in each case that may adversely impact us), expropriation/nationalization of assets, price controls on commodity prices, inability to enforce contracts in certain circumstances, the potential for a sovereign debt default or a hyperinflationary economic environment, and other economic and political risks; risks that third party operators will not operate in projects where we have an interest in a safe, efficient and effective manner; risks that third parties will not satisfy their contractual obligations; loss of markets and other economic and industry conditions; volatility of commodity prices; currency fluctuations; imprecision of reserve estimates; environmental risks; competition from other producers; inability to retain drilling services; delays resulting from or inability to obtain required regulatory approvals; the lack of availability of qualified personnel or management; stock market volatility and ability to access sufficient capital from internal and external sources; and economic or industry condition changes. Actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom.

With respect to forward-looking information contained herein, we have made assumptions regarding: the impact of increasing competition; the general stability of the economic and political environment in Argentina; the timely receipt of any required regulatory approvals; our ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the costs of obtaining equipment and personnel to complete our capital expenditure program; the ability of the operator of the projects in which we have an interest to operate the field in a safe, efficient and effective manner; our ability to obtain financing on acceptable terms when and if needed; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration activities; the timing and costs of pipeline, storage and facility construction and expansion and our ability to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, commodity price controls, import/export matters, taxes and environmental matters in Argentina; and our ability to successfully market our oil and natural gas products. Additional information on these and other factors that could affect us are included in reports on file with Canadian securities regulatory authorities, including under the heading "Risk Factors" in our annual information form, and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this document are made as of the date of this document, and we do not undertake any obligation to update publicly or to revise any of the forward looking statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities law.

Initial Production Rates: Any references in this news release to production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. Initial production rates may be estimated based on other third party estimates or limited data available at this time. Well-flow test result data should be considered to be preliminary until a pressure transient analysis and/or well-test interpretation has been carried out. In all cases in this news release initial production results are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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