June 05, 2012 09:00 ET

Trilogy Energy Corp. Provides Operational Update on Montney Oil Pool

CALGARY, ALBERTA--(Marketwire - June 5, 2012) -

Trilogy Energy Corp. ("Trilogy" or the "Company") (TSX:TET) is pleased to announce that its previously announced facility projects at the Kaybob Montney oil pool are complete and operational as of May 26, 2012. The new 16-7-64-18W5 field battery includes separators, tanks, liquid pumps, and gas compression designed to handle approximately 12,000 Bbl/d of emulsion and approximately 18 MMcf/d of solution gas. The expansion of the central 12-10-64-19W5 Battery included the addition of a third oil treater, a second 10,000 barrel sales oil storage tank, and a new sales LACT unit. These projects are in addition to the two 8" gas and oil pipelines installed in February to connect the field batteries to the main sales battery at 12-10-64-19W5M. The new facilities and expansion projects are capable of handling over 20,000 Bbl/d of emulsion and were required to handle additional production volumes from this pool which had been curtailed pending completion of these facility expansions.

Production from the pool increased from approximately 8,500 Bbl/d of crude oil and 15 MMcf/d of solution gas over the first 25 days of May to approximately 10,500 Bbl/d of crude oil and 23 MMcf/d of solution gas during the 9 day period following completion of the new facilities. Currently, approximately 29 of the 31 wells drilled into the pool to date are on production. As wellbore and operating conditions begin to stabilize, Trilogy expects to optimize production from each well and establish greater predictability as to facility run time and well decline rates. The remaining 2 wells will be completed with multi-stage fracture stimulations over the next month, as weather permits. Trilogy anticipates utilizing two drilling rigs to drill 6 additional wells into the pool commencing in early July. Each well is projected to take approximately 30 days, including 20 days to drill and 10 days to complete with multi-stage fracture stimulation and prepare the well for production. Trilogy expects production from these wells to remain relatively flat at approximately 12,000 Bbl/d for the balance of the year.

With lower natural gas prices forecasted for the balance of the year, Trilogy has reallocated capital previously budgeted for additional natural gas wells towards new oil projects, which are expected to increase the oil and natural gas liquids component of the Company's production to approximately 50 percent for the third and fourth quarters of the year.

Given current strip pricing, production guidance and budgeted capital spending, Trilogy anticipates cash flow to exceed capital expenditures and dividends for the remainder of the year, reducing net debt to approximately $500 million by year end.

About Trilogy

Trilogy is a growing petroleum and natural gas-focused Canadian energy corporation that actively develops, produces and sells natural gas, crude oil and natural gas liquids. Trilogy's geographically concentrated assets are primarily low-risk, high working interest properties that provide abundant infill drilling opportunities and good access to infrastructure and processing facilities, many of which are operated and controlled by Trilogy. Trilogy's common shares are listed on the Toronto Stock Exchange under the symbol "TET".

Forward-Looking Statements Advisory

In the interests of providing Trilogy Shareholders and potential investors with information regarding Trilogy, certain information included in this news release constitutes forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "continue", "estimate", "propose", "budget", "forecast", "outlook", "may", "will", "could", "potential", "target" or similar words suggesting future outcomes or statements regarding an outlook. In particular, this news release contains, without limitation, forward-looking statements pertaining to Trilogy's drilling and development plans with respect to the Kaybob Montney oil pool; the nature, timing and result of such drilling and development plans; projected capital expenditures and the relative allocation thereof; future production levels; and projections regarding commodity prices, cash flow and debt levels in 2012.

Such forward-looking statements are based on a number of assumptions regarding, among other things, current forecasts for production; the natural gas liquids content of Trilogy's natural gas; current commodity price forecasts for petroleum, natural gas and natural gas liquids; future power prices; the ability of Trilogy and its partners to obtain operational results consistent with expectations; geology application to Trilogy's land holdings; current reserves forecasts; the timing and costs associated with planned development and construction projects; the timely receipt of regulatory approvals; the ability of Trilogy to obtain equipment, services and supplies in a timely manner to carry out its activities; assumptions regarding expenses and royalties and the continuation of government royalty regimes and incentive plans; the ability of Trilogy to secure adequate product processing, transmission and transportation and to market oil and natural gas successfully to current and new customers; and assumptions regarding capital expenditures and the relative allocation thereof, currency, exchange and interest rates; cash flow consistent with expectations; Trilogy's ability to repay debt as planned; credit facility increases consistent with expectations; and the continuity of the mutually beneficial agreement with Aux Sable Canada LP; among others, which may prove to be incorrect. Although Trilogy believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Trilogy can give no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause actual results to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: volatility of oil and gas and natural gas liquids prices, foreign currency, exchange rates, interest rates and market demand; the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserves estimates and reserves life; imprecision in estimating future production and the composition thereof, costs and expenses; the ability of management to execute its business plan; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; Trilogy's ability to secure adequate product processing, transmission and transportation; the ability of Trilogy to add production and reserves through development and exploration activities; uncertainties as to the availability and cost of financing, including Trilogy's ability to extend its credit facility on an ongoing basis; Trilogy's ability to enter into or renew leases and obtain regulatory approvals in a timely manner or at all; the possibility that government programs, policies, regulations or laws relating to royalties, incentive programs, taxation or the environment, may change; risks inherent in Trilogy's marketing operations, including credit risk; risks associated with existing and potential future lawsuits and regulatory actions against Trilogy; health, safety and environmental risks; uncertainty regarding aboriginal land claims and co-existing local populations; uncertainty regarding results of third party industry participants' objections to Trilogy's development plans; weather and general economic and business conditions and other risks and uncertainties described elsewhere in this document or in Trilogy's other filings with Canadian securities authorities.

The forward-looking statements contained in this news release are made as of the date hereof and Trilogy 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 required by applicable securities laws.

Contact Information

  • Trilogy Energy Corp.
    J.H.T. (Jim) Riddell
    Chief Executive Officer

    Trilogy Energy Corp.
    J.B. (John) Williams
    President and Chief Operating Officer

    Trilogy Energy Corp.
    M.G. (Mike) Kohut
    Chief Financial Officer

    Trilogy Energy Corp.
    #1400, 332 - 6th Avenue S.W.
    Calgary, Alberta T2P 0B2
    (403) 290-2900
    (403) 263-8915 (FAX)