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Vol. 18, No. 19 Week of May 12, 2013
Providing coverage of Bakken oil and gas

Mitigating Bakken decline

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Maturing production, well optimization activities result in leveling off in output from PetroBakken’s SE Saskatchewan unit, however…

Gary Park

For Petroleum News Bakken

Maturing production and well optimization activities have resulted in a leveling off in production from PetroBakken’s business unit in southeast Saskatchewan, trimming output to 19,029 barrels of oil equivalent per day in the first quarter from 19,741 boe per day in the final three months of 2012, the company reported.

However, Chief Operating Officer Rene LePrade said “future drilling and optimization of our extensive inventory of existing wells” should mitigate production declines and generate free cash flow from the Bakken unit.

First-quarter activities in the Bakken included 15 wells, with 14 brought on production.

A conventional business unit in the same region drilled seven wells in the three months and generated average output of 6,073 boe per day.

The company expects to gain shareholder approval on May 22 to rename itself Lightstream Resources, mirroring its diversification into areas such as the Cardium formation of central Alberta’s Pembina oil field.

Cardium drilling

Production for the January-March period averaged 49,078 boe per day (82 percent light oil and liquids), an increase of 2,306 boe per day from the opening quarter of 2012.

PetroBakken credited most of the growth to the successful execution of a drilling program in the Cardium, a formation that consists of massive sandstone beds separated by shale.

Because the Cardium has a higher gas-to-oil ratio than the Saskatchewan Bakken, the company’s liquids weighting dropped slightly from a year ago, while temporary facility restrictions on the Cardium unit had a proportionately larger impact on light oil production.

Production in the latest quarter “came right in line with our guidance and internal estimates and the beginning of the second quarter (without output averaging 48,000 boe per day in April) is running slightly ahead of our expectations,” said Chief Executive Officer John Wright.

He said PetroBakken spent 45 percent of its C$675 million 2013 capital budget in the first quarter by drilling 41 percent of a forecast 129 wells.

Funds flow down

First-quarter funds flow from operations was C$178.9 million, down from C$187.4 million a year earlier, mostly due to a decrease in realized operating netback.

At March 31, the company had 30 wells waiting for completion and/or brought on production. Wright expects half of that total will come on stream by mid-year.

He said the Cardium should yield 25,000-30,000 boe per day through 2013 and 2014 and could edge over the 30,000-barrel mark for a “very long, extended period of time and make the best use of any infrastructure build-up that we’ve done, not unlike the Bakken which has turned into a 19,000-20,000 boe per day cash cow for us.”

In a note, analyst Brian Kristjansen of Dundee Capital said the results matched his expectations but, because of concerns over liquidity, the company should look at selling some assets to reduce debt.



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