Seaview Energy Inc.

Seaview Energy Inc.

October 19, 2009 09:30 ET

Seaview Energy Inc. Announces Results of Recent Drilling Program, Reconfirms $52 Million Credit Facility, and Upwards Revision to Guidance

CALGARY, ALBERTA--(Marketwire - Oct. 19, 2009) -


Seaview Energy Inc. (TSX VENTURE:CVU.A) (TSX VENTURE:CVU.B) ("Seaview" or the "Company") is pleased to provide an operational update on the Company's recent drilling program in the Peace River Arch area which included the drilling of 6 wells (5.6 net) achieving an 82% success rate.

Four wells (3.6 net) have been drilled and completed to date and have established significant additions to Seaview's productive capacity. The cumulative production test rates of these wells are 7.3 mmcf/d (6.6 mmcf/d net or 1,095 boe/d net) and the wells are expected to be placed on production over the next two quarters. Based on the strong results of the recent drilling program, the Company is pleased to announce an upward revision to its year-end exit production guidance by 9% to over 3,000 boe/d, compared to the previous exit guidance of over 2,750 boe/d.

Additionally, the fifth well (1.0 net) remains to be completed and an additional well (1.0 net) encountered the target reservoir but has been abandoned due to operational problems while casing. This well will be re-drilled in the near future.

Seaview has increased its average working interest in this operated drilling program by an incremental 31% (representing 1.7 net wells) through recent asset acquisitions and partner farm-ins resulting in an average working interest of 93%.

The Company benefitted from significantly lower service costs to complete the six well drilling program with average drill costs estimated to be $340 per meter before Alberta Royalty Drilling Credits. Net drilling costs in this program are $1.24 million, after deducting the $1.76 million in drilling credits earned by drilling a total of approximately 8,800 meters. Including expected completion and equipping costs, Seaview estimates the cost of adding new production from this program will be approximately $5,500 per flowing boe.

Seaview will continue to fund its exploration and development capital program from existing cash flow which is supported by its strong hedging program and will use its undrawn credit facility to fund strategic opportunities. Seaview's capital program for the winter drilling season includes the tie-in of the recently drilled wells and the drilling of six additional wells that will either delineate recent discoveries or test new prospects. The planned capital program will be aimed at maximizing value based on Alberta's Royalty Incentive Program.

Business Strategy
Although industry continues to experience volatile commodity prices and the impact of the global financial crisis on capital markets, Seaview remains well positioned to continue executing its aggressive growth strategy. Through a disciplined approach to capital management, the Company has several key characteristics that support continued growth and value creation for shareholders despite the current economic climate:

  • High-quality, long reserve life assets, focused on natural gas in the Peace River arch and light oil in southeast Saskatchewan, both desirable areas within the Western Canadian sedimentary basin;
  • Strong financial position including a low-cost structure, strong balance sheet and $18-million of available credit capacity providing Seaview with the ability to capitalize on strategic opportunities;
  • Attractive commodity risk management program to provide an enhanced cash flow stream in order to maintain balance sheet strength, secure acquisition economics and finance the company's capital expenditures; and
  • Strong management team, directors and technical professionals with significant ownership positions, ensuring strong alignment to shareholders' interests.

Seaview continues to focus on the Company's balanced growth strategy of acquiring, exploiting and exploring for high-quality natural gas and light oil assets in Western Canada.

Seaview's strong financial position and deep prospect inventory has allowed the Company to maximize the benefits of the Royalty Incentive Programs announced in 2009 ("2009 RIP"). The 2009 RIP provides a short-term opportunity to maximize the net asset value by adding new reserves at reduced royalty rates on the new production and earning drilling credits to reduce royalties payable on existing production. In addition, the substantial reduction in service costs for drilling and completing wells has greatly improved the economics of Seaview's natural gas assets. Seaview remains well positioned to further capitalize on this opportunity during a period where the industry is experiencing a pronounced downturn in activity.

Reconfirmation of Existing Credit Facilities

Seaview has recently completed its mid-year review of the Company's existing $52 million credit facility with the National Bank of Canada. Despite an estimated 20% reduction in the forward strip prices used in determining the current borrowing base, the Company is pleased to report the existing $52 million credit facility has been maintained, subject to final creditor approval. The next scheduled review date is May 1, 2010. The Company estimates current net debt of approximately $34 million (65% drawn) thus leaving $18 million of the unutilized credit facility for additional strategic drilling and acquisition opportunities.

Seaview's combination of long-life reserves, cash flow enhanced by a strong hedging program and track record of quarterly production growth continues to support the Company's financial strength despite the challenging natural gas price environment facing industry overall.

Outlook; Upward Revision to 2009 Guidance

Seaview's core areas feature high-quality, long-life reserves with significant identified upside potential through exploration and development drilling. The Company is well positioned to continue its growth strategy in 2009 and into 2010 despite the current challenging economic climate.

Based on the successful results from the recent drilling program, management is pleased to provide updated guidance for the balance of 2009.

  • Maintain the Company's forecasted 2009 average daily production estimate to be in excess of 2,300 boe/d, representing a 114% increase compared to 2008 average daily production of 1077 boe/d.
  • Increase to the Company's forecasted 2009 exit production to more than 3,000 boe/d, representing a 9% increase from previous guidance provided in June 2009.
  • Confirmation of Seaview's bank line at $52 million, subject to lenders final approval, with the next review scheduled for May 1, 2010.
  • A diversified portfolio of exploration, development and lower-risk optimization projects in both the Peace River Arch and South East Saskatchewan core areas.
  • Seaview currently has 65.42 million Class A shares outstanding and 1.054 million Class B shares outstanding.

Seaview is a Calgary, Alberta based company engaged in the exploration, development and production of conventional crude oil and natural gas reserves in Canada. Seaview's strategy is to build shareholder value through a balance of exploration and development drilling complemented by a focused acquisition program.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.

This press release may contain forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, anticipations, expectations, opinions, forecasts, projections, guidance or other similar statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g. 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 reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses and health, safety and environmental risks), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations 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.

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

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