Quarterly / Earnings Reports | Second Quarter (2Q) Update | Forecast - Production | Capital Markets | Private Equity Activity

Cequence Reports Record Production; 10% Increase in Q2

Email    |    Print    |    Bookmark

You Need to login first

   |    Tuesday,August 12,2014

Cequence Energy Ltd. announced their financial and operating results for the second quarter of 2014.

The following are Cequence’s financial and operating highlights for the second quarter of 2014:

• Produced a corporate record average production of 12,735 boe/d in the second quarter an increase of 14 percent from the prior year and 10 percent over the first quarter of 2014;

• Increased funds flow from operations by 36 percent from the prior year to $20.2 million on the strength of higher production and increased natural gas prices;

• Corporate operating netbacks increased 22 percent from the prior year to $21.49;

• Commenced drilling operations earlier than expected in June with a two rig drilling program; and,

• Sold the Ansell property for gross proceeds of $141 million subsequent to the second quarter resulting in a highly focused Montney production company with a strong balance sheet.

Operations Update

In the second quarter, production averaged 12,735 boepd, a 10 percent increase from the first
quarter of 2014 and a new record for the Company. Higher production was a result of new wells
onstream at Ansell following the completion of production facilities and new wells brought on
production at Simonette late in the first quarter.

Capital expenditures in the second quarter were $12.8 million and were directed to the
commencement of the two rig drilling program in early June, the completion of the Ansell drilling
program and facilities, and the completion and tie-in of the first quarter drilling program at
Simonette.

Cequence recently announced its capital budget of $160 million, prior to dispositions, for the
remainder of 2014 and the first quarter of 2015. The program is focused on Montney pad
development drilling that is expected to increase capital efficiencies but will also result in longer
cycle times as multiple wells are drilled on single pads prior to being completed. In total 17 gross
wells are expected to be drilled including 15 Montney wells, one Dunvegan well and one Falher well.
Cequence expects production to grow to 15,000 boe/d to exit the first quarter of 2015.

Drilling commenced on the Company’s first Montney pad in early June as dry spring conditions
allowed for the mobilization of equipment earlier than anticipated. Two Montney wells have now
been drilled and the third well was spud on August 10th. Drilling is on schedule and it is estimated
the first three wells will be completed and producing in early October.

The Company’s second drilling rig was activated in June and recently finished drilling a Dunvegan
well that is expected to be completed and on production by the end of August. The well is the third
Dunvegan well to be drilled in the Company’s liquids rich acreage at Simonette. The first two wells
drilled into this pool are two of the most economic wells that the Company has drilled to date. The
second rig will drill a Falher development well prior to commencing a second Montney pad program.
This pad-style drilling in the Montney represents a significant shift in the Company’s operating
strategy and is the logical progression in the development of the Simonette Montney play.