Midway Energy Ltd.
TSX : MEL

Midway Energy Ltd.

January 20, 2011 16:16 ET

Midway Announces Operational Update and 2011 Guidance

CALGARY, ALBERTA--(Marketwire - Jan. 20, 2011) - Midway Energy Ltd. ("Midway" or the "Company") (TSX:MEL) is pleased to provide an operational update and guidance for 2011.

Operational Update

In December, 2010 Midway's production averaged approximately 3,200 boe per day, an increase of 265 percent over December 2009 production of 876 boe per day. At year end 2010 Midway had 2.5 net Cardium wells awaiting completion.

For the year ended December 31, 2010, Midway drilled a total of 23 (18 net) Cardium wells in the Garrington area. On a group basis, the 18 net operated wells averaged 317 boe per day per well for the first 30 days of production. We have seen a trend of continual improvement in well performance throughout 2010 with the last 10 wells drilled having 30 day production rates averaging 356 boe per day. During the year, Midway also participated in drilling 10 non-operated Cardium wells in Garrington, resulting in an additional 0.60 net well.

Midway expects to drill 21.5 net horizontal Cardium wells in Garrington in 2011, of which 2 wells will target the Cardium "B" Sand and the remaining 19.5 wells will be Cardium "A" Sand locations.

Midway has identified up to 15 operated, high working interest Cardium "B" Sand locations at Garrington. Performance demonstrated from wells in this interval on Midway's nearby non-operated lands has significantly de-risked this zone. These Cardium "B" Sand locations are in addition to Midway's inventory of approximately 140 Cardium "A" Sand locations.

Prior to year end, Midway commenced drilling its first horizontal well in the Swan Hills area targeting Beaverhill Lake oil. The well has been drilled with approximately 1,400 meters of horizontal section and is currently waiting to be fraced. Midway currently owns 8,020 acres of land in the Swan Hills area and expects that these lands are prospective for tight Beaverhill Lake light oil.

2011 Outlook

Midway also announces that its Board of Directors has approved a 2011 capital budget (the "Budget") of $95 million. The Budget includes the drilling of a total of 25.5 net wells comprised of 19.5 Cardium "A" Sand wells, 2 Cardium "B" Sand wells and 4 Beaverhill Lake wells. The Budget also includes $11.5 million allocated to Crown land sales and acquisitions and $3.8 million to pipeline facilities in Garrington and Swan Hills. This capital program will be financed through a combination of funds from operations and an expansion of the Company's bank facility.

Production is expected to average 4,100 boe per day in 2011 (67 percent oil and NGLs), an increase of 95 percent over the estimated 2010 average of 2,100 boe per day. Exit production rates for 2011 are expected to be 5,000 to 5,100 boe per day.

Midway's 2011 production mix is expected to increase from 65 percent oil and NGLs at the beginning of the year to 70 percent at year end.

The majority of the 2011 Budget will be spent in Garrington which is expected to result in an exit production rate of approximately 3,800 boe per day from Garrington. Capital has also been allocated for pipeline and facility expansion to accommodate future production growth.

In Swan Hills, 4 horizontal wells are initially planned for 2011 with amounts budgeted for additional Crown land, acquisitions and facilities in the area.

In 2011 Midway will focus its efforts on the development of its Cardium assets in Garrington and will accelerate the development of our Swan Hills Beaverhill Lake lands as we gain further understanding of the play. We are focused on building on the success we realized in 2010 and look forward to showing continual quarterly growth in 2011.

Forward-looking Statements

This news release contains forward-looking statements relating to the Company's plans and other aspects of the Company's anticipated future operations, management focus, strategies, financial and operating results and business opportunities. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. In particular, this press release contains forward-looking statements relating, but not limited to:

  • drilling and development plans and targets and prospects and the expected results therefrom;
  • planned pipeline and facility expansions and the results therefrom;
  • plans to expand the Company's land holdings and drillable land base;
  • the amount of capital expenditures and the Company's capital expenditure plans
  • anticipated exit and average production rates and production mix;
  • performance characteristics of Midway's oil and natural gas properties;
  • sources of funding of Midway's capital budget, including anticipated funds from operations and an expanded credit facility; and
  • Midway's business strategy and management focus and the results therefrom.

These forward-looking statements are based on various assumptions including: the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; the timing, location and extent of future drilling operations and the results therefrom; anticipated timing and results of capital expenditures; estimates of future production and operating costs; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; future exchange and interest rates, Midway's ability to obtain equipment in a timely manner to carry out development activities, impact of increasing competition, ability to market oil and natural gas successfully and the ability of Midway to access capital. While Midway considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodity prices; currency fluctuations; imprecision of reserve estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; general economic conditions in Canada, the U.S. and globally; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Midway believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this new release and the company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

51-101 Advisory

In conformity with National Instrument 51-101, Standards for Disclosure of Oil and Gas Activities ("NI 51-101"), natural gas volumes have been converted to barrels of oil equivalent ("boe") using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. This ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Readers are cautioned that the term "boe" may be misleading, particularly if used in isolation.

Information Regarding Midway

Midway Energy Ltd. is a public oil and natural gas exploration and development company, located in Calgary, Alberta with operations pursued in Alberta. Midway currently trades on the Toronto Stock Exchange (TSX) under the Symbol "MEL".

Contact Information

  • Midway Energy Ltd.
    Scott Ratushny
    Chairman and Chief Executive Officer
    (403) 216-2705
    or
    Midway Energy Ltd.
    Douglas K. Smith
    Chief Financial Officer
    (403) 216-2705
    info@midwayenergy.com