April 18, 2011 19:08 ET

Trilogy Energy Corp. Provides Update on Duvernay Drilling and Completion Operations, Kaybob Oil Development and Announces April 2011 Dividend

CALGARY, ALBERTA--(Marketwire - April 18, 2011) - Trilogy Energy Corp. ("Trilogy") (TSX:TET) provides an update on the drilling and completion operations from its second horizontal well targeting the Devonian Duvernay formation and operations from its recently announced Montney oil development in the Kaybob area. Trilogy also announces its April 2011 dividend.

Kaybob Devonian Duvernay

In the Kaybob area, Trilogy managed the drilling and completion operations for the second horizontal well targeting the Devonian Duvernay shale formation under a previously announced joint venture with Celtic Exploration Ltd. and Yoho Resources Inc., pursuant to which each partner has a one-third working interest in 30 gross sections of land.

The well (the "3-13 well") was drilled from a surface location at 16-14-60-20W5 to a bottom hole location at 03-13-060-20W5, with a total depth of 4,866 meters. The horizontal lateral was 1,391 metres in length within the Duvernay shale formation. The well was drilled and cased over 50 days at a cost of approximately $6.5 million for the drilling operation.

Completion operations began March 8, 2011 and will be concluded in late April. The well was fracture stimulated in 31 perforated intervals in 12 separate stages along the length of the horizontal wellbore. In total, approximately 2,300 tonnes of sand and 138,600 barrels of slick water were used to stimulate the well. The well was completed using a staged "plug and perf" horizontal completion technique, incorporating perforation clusters (2 and 3 per stage) to stimulate the well. Following the fracture stimulation, the plugs were drilled out to permit the well to be evaluated without obstruction in the horizontal portion of the well. Production tubing and recorders will be run into the well following completion of the plug removal and logging operations. Completion costs for the well have totaled approximately $11 million; however, Trilogy expects to see substantial cost savings on subsequent wells targeting this formation as the 3-13 well was the first to use the "plug and perf" completion methodology in the Duvernay.

The 3-13 well has been tied in since April 10, 2011 in order to reduce flared emissions during the completion and evaluation period. The well was flowing up 7 inch casing at approximately 1,250 Boe per day, consisting of 5.2 MMcf per day of sweet natural gas and an estimated 390 barrels per day of natural gas liquids, including 180 barrels per day of 56° API condensate and 1,450 barrels per day of water. Current production rates may improve when production tubing is run into the well and additional water used to complete the well has been recovered; to date only 36,300 barrels (26 percent) of the completion water has been recovered. The sweet natural gas from the 3-13 well is liquids rich and is expected to yield total liquids of approximately 75 barrels per MMcf of raw gas including free condensate (35 barrels per MMcf).

Trilogy is encouraged by the results from the second horizontal Duvernay shale well and particularly the high liquids content given the current premium in pricing for natural gas liquids. Once completion operations are finalized, production tubing is run into the well and further production data is obtained, Trilogy will review additional drilling locations with its partners. Trilogy expects to participate in one more well targeting the Duvernay shale formation during the balance of 2011. Trilogy currently owns approximately 168,409 gross acres and 138,173 net acres (263 gross sections and 216 net sections) of land with Duvernay rights at Kaybob and surrounding areas.

Kaybob Montney Oil Development

Trilogy has followed up on the success of its first two horizontal Montney oil wells by drilling three additional horizontal Montney wells into the pool. Two new wells were drilled from the surface lease at 16-2-64-18W5, the same surface lease used to drill the original 16-1-64-18W5 horizontal Montney oil well, to bottom hole locations at 9-1-64-18W5 (the "9-1 well") and 13-2-64-18W5 (the "13-2 well"). The 9-1 and 13-2 horizontal wells are expected to be fracture stimulated in late April and flow tested in May.

The third new well (the "5-17 well") was drilled as a follow-up to Trilogy's successful horizontal Montney oil well at 3-21-64-18W5 that was announced on February 9, 2011 (the "3-21 well"). The 3-21 well recovered 3,650 barrels of completion fluid and 8,800 barrels of new oil during a three day flow period before being suspended upon reaching its maximum permitted flare volume. Operations are in progress to tie the 3-21 well into the existing gathering system at restricted rates while the gathering and processing infrastructure is expanded to handle additional production from the new Montney oil wells. The 5-17 well was drilled from the same surface lease as 3-21, to a bottom hole location at 5-17-64-18W5, situated on the acreage Trilogy acquired at the February 9, 2011 Crown land sale. Completion operations on the 5-17 well are expected to be finished in May if access and lease conditions permit.

Trilogy is developing an accelerated drilling program as a result of the early success in its Kaybob Montney oil play, which program is subject to approval by Trilogy's Board of Directors. The program, if approved, would be expected to result in an increase to Trilogy's 2011 capital spending and production levels.

April 2011 Dividend

Trilogy also announces that its cash dividend for April 2011 will be $0.035 per share. The dividend is payable on May 16, 2011 to shareholders of record on May 2, 2011. The ex-dividend date is April 28, 2011.

About Trilogy

Trilogy is a petroleum and natural gas-focused Canadian energy corporation that actively acquires, develops, produces and sells natural gas, crude oil and natural gas liquids. Trilogy's geographically concentrated assets are primarily low-risk, high working interest, lower-decline 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 exploration and development plans with respect to the Kaybob area Devonian Duvernay shale formation and Montney oil play; the nature, timing and costs with respect to Trilogy's drilling and development plans; expected cost savings on future operations; projected capital expenditures and production levels; and the natural gas liquids content of Trilogy's natural gas and pricing related thereto.

Such forward-looking statements are based on a number of assumptions regarding, among other things, current production forecasts; current commodity price forecasts for petroleum, natural gas and natural gas liquids; current reserves estimates; the natural gas liquids content of Trilogy's natural gas; geology regarding the extent and development potential of the Kaybob Devonian Duvernay shale formation and Kaybob Montney oil pool; the ability of Trilogy and its partners to obtain operational results consistent with expectations; the timing and costs associated with planned drilling and development plans; the availability of financing; assumptions regarding expenses and royalties and the continuation of government royalty regimes and incentive plans; assumptions regarding capital expenditures; 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; and general economic and business conditions, 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 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, 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; the possibility that government programs, policies, regulations or laws relating to royalties, 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; 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.


This news release contains disclosure expressed as "Boe per day", "MMcf", "MMcf per day", "Barrels" and "Barrels per day". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

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
    Phone: (403) 290-2900
    (403) 263-8915