Exploration & Production | Drilling / Well Results | Capital Markets | Private Equity Activity

Cequence Finds Large Well in Wilrich

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Cequence Energy Ltd. has announced the expansion of its project at Ansell and production of 12,000 boepd.

Ansell Project

Cequence is pleased to announce the initial success of the Company's Wilrich drilling program at Ansell and the addition of key lands increasing its total landholdings to 46.5 gross sections. The most recent Wilrich well was drilled at 14-19 (49 % working interest) and tested at 2,500 boepd, and has produced for 60 days at an average restricted rate of 960 boepd. Two Ansell wells have been completed to date and are ahead of the Company's model expectation. Current net production in the Ansell area is approximately 650 boepd and is restricted by production facilities. One additional Wilrich well was drilled in the first quarter and is awaiting completion and two additional horizontal wells are currently drilling.

The first quarter capital program at Ansell is expected to include six wells (3 net) and the construction of gathering and compression facilities to increase production capacity to approximately 40 mmcf/day. Five of the six wells are scheduled to be 'earning wells' where Cequence pays 15% of the capital cost to retain a 49% working interest with the sixth well scheduled to be drilled at the Company's 49% working interest.

Drilling to date at Ansell has identified the Notikewin and Falher formations as prospective secondary targets on Cequence acreage. Cequence's partner is shooting a 135 square kilometer 3D seismic program to both focus the Wilrich drilling program and image these additional potential targets. With the recent addition of contiguous and highly prospective lands, continued drilling success by Cequence and other operators in the area, the acquisition of 3D data and construction of the gathering system, Ansell is considered a new core area by the Company. Pending results from the initial wells and the ongoing plans of the Company's partner in the area, Cequence may direct additional capital to this area in 2014 to drill additional Wilrich wells and add production facilities.

Simonette Project

In the fourth quarter of 2013, Cequence completed a 65% working interest Dunvegan well at 5-2. The well was recently put on production at restricted gross production rates of 10.0 mmcf/d of natural gas and 300 bbls/day of free condensate. The 5-2 well is a follow-up to the Company's 10-2 well that has produced 2.5 bcf since commencing production in February 2013.

Montney development at Simonette is ongoing with three wells drilled in the fourth quarter of 2013. The 10-24 well was recently brought on production at restricted rates of 5.0 mmcf/d and 75 bbls/d of free condensate at flowing casing pressure of 1,715 psi. The 10-24 well is located on a new padsite located 1.5 miles from existing offset Montney development. The remaining two Montney wells were drilled off the 7-29 padsite and experienced mechanical difficulties on completion. Diagnostic tools were run on both wells and Cequence is currently evaluating remediation plans. It is anticipated that completions will be able to be performed on these wells. These two wells offset Cequence's best liquids producers at 9-21 and 3-21.

A Montney exploration well at 16-10-61-01W6 is currently drilling and will be the first test on the southwestern Montney acreage at Simonette which the Company has a 100% working interest. Management believes the geologic data observed from the open hole logs of the full Montney section is encouraging. The well is expected to be completed in the first quarter of 2014. If successful, management believes 16-10 would derisk Montney acreage on the western portion of Simonette where the Company's reserves evaluators have not previously assigned any Montney reserves or resources.

In addition, Cequence has drilled a Wilrich well at 13-30-61-26W5. The 13-30 well is a significant step out from the producing Wilrich wells at Simonette in an area where the Company's reserves evaluators have not previously assigned any Wilirch reserves. The 13-30 well is expected to be completed in February 2014.

The Company currently has two operated rigs drilling at Simonette.

Production

Based on field estimates, production for 2013 averaged 10,200 boepd (56 mmcfd of gas and 1,500 bpd of liquids), which is slightly higher than the Company's previously provided production guidance of 10,000 boepd for the year. The 2013 average production represents an increase of 13 percent above 2012 average production.

Based on field estimates, production recently reached 12,000 boepd with the tie-in of the 5-2 Dunvegan well and the completion of our 10-24 Montney well, both at Simonette, both of which wells are currently restricted. Cequence has recently maximized field capacity at Simonette and Ansell. The 13-11 compression facility at Simonette is being expanded and capacity is expected to reach 70 mmcf/d in early February. Cequence expects to complete an additional 10 gross (7 net) wells in the first quarter of 2014.

Production from the 3-31 and 15-31 Montney wells completed in Q4 2013 have each averaged 860 and 844 boepd (11% condensate), respectively, for the first 60 days of restricted production. Production from both wells is better than the Company's model expectations. The 14-1 Montney well completed in Q4 has produced at an average of 590 boepd (9% condensate) for the first 60 days. This is slightly below the Company's Montney model expectation.