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Black Pearl Tests Blackrod; Defers Heavy Oil Drilling

Share Print Bookmark    |    Wednesday,August 05,2015

BlackPearl Resources Inc. has announced financial and operating results for the three and six months ended June 30, 2015.

Highlights:

• At Onion Lake, construction and commissioning of the 6,000 barrels per day first phase of the thermal EOR project was completed and we began steam injection in May;
• At Blackrod, the pilot results from the second SAGD well pair continue to be positive; the well is currently producing in excess of 550 barrels of oil per day with a steam oil ratio of 2.6;
• Capital spending was $59 million in the first half of the year, over 90% of which was spend on the thermal project at Onion Lake;
• The Company renewed its existing bank credit facilities of $150 million with a syndicate of lenders;
• Production averaged 8,051 barrels of oil equivalent (boe) per day in the second quarter, a 9% decrease compared to Q2 2014 volumes. 
• The decrease is attributed to no drilling activity during the first half of the year due to low oil prices and our focus on completing construction of the Onion Lake thermal project.

Property Review

Onion Lake

• Construction and commissioning of the first 6,000 barrels per day phase of our Onion Lake thermal EOR project was completed during the second quarter. Steam injection commenced in May. We are currently injecting approximately 15,000 barrels of steam per day into the producer and injector wells. The first phase of the project included 13 horizontal production wells, 35 vertical steam injector wells, water, steam and oil handling facilities, as well as source water facilities and pipeline. Total cost of this phase was approximately $225 million. First oil production is expected in September and ramp-up to peak productive capacity is expected to take 9 to 12 months after first production.
• No new conventional drilling occurred during the first half of 2015 due to low oil prices. However, during the second quarter we reactivated several wells that we shut-in during the first quarter due to low prices and higher operating costs.

Blackrod

• The pilot at Blackrod continues to deliver strong results, with production from the second well pair averaging 525 barrels of oil per day during the second quarter with an average quarterly instantaneous steam oil ratio of 2.7. Since steaming commenced in November 2013 the well has produced over 160,000 barrels of oil. Production from the well continues to ramp-up, with July production estimated to be approximately 570 barrels of oil per day with a steam oil ratio of 2.6.The successful operating results achieved for the second well pair demonstrate the viability for commercial development of the Blackrod project. We plan to continue to operate the pilot to refine and optimize operating procedures and to gather additional technical data that can be used in the commercial development design.
• The original pilot well pair continues to operate at approximately 80 barrels of oil per day. Production from this well is restricted as we have limited remaining steam capacity available from the existing pilot facilities that can be directed to this well pair.
• There have been no new updates regarding the status of our 80,000 barrel per day commercial development application at Blackrod. The application is currently under review by the Alberta Energy Regulator. We anticipate receiving regulatory approval later this year.

Mooney

• No new activities were initiated at Mooney during the first half of the year due to low oil prices. We are continuing with design plans for the expansion of the ASP flood to the phase two lands, which has been deferred until oil prices improve. Our focus during the first half was to review operations and flood development. As a result of this review, we have been able to significantly reduce operating costs at Mooney, primarily by optimizing the amount of chemical injection in certain areas of the reservoir due to the maturity of the flood in those areas.

Production

• Oil and gas production averaged 8,051 barrels of oil equivalent per day in the second quarter of 2015, a 9% decrease compared with the second quarter of 2014. The decrease in oil production reflects natural production declines, no new drilling activity in 2015, as well as, the Company's decision to shut-in various wells at Onion Lake due to low oil prices.

Financial Results

• Our oil hedging program has helped mitigate some of the negative impact of the low oil price environment in 2015. During the first half of 2015 we realized a gain of $19.0 million from our oil hedging program, which was the equivalent of adding $13.69 per barrel to our wellhead price.
• Long term debt as at June 30, 2015 increased to $94 million, largely as a result of capital spending to complete construction on the Onion Lake thermal project. During the second quarter the Company completed its annual review and semi-annual borrowing base redetermination with the syndicate of lending institutions in its credit facility. Under the terms of the amended credit agreement with the lenders, the total credit facilities available to the Company remains at $150 million, consisting of a $125 million syndicated revolving line of credit, a non-syndicated operating line of credit of $10 million and a $15 million supplemental loan facility.