Exploration & Production | Quarterly / Earnings Reports | Third Quarter (3Q) Update
Cub Ups Production, Preps to Drill Well Targeting L Sands
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Cub Energy Inc. reported the following update for its third quarter operations. This update includes ongoing operations from KUB-Gas LLC, which Cub has a 30% ownership interest, and Tysagaz JSC, Cub's 100% owned subsidiary.
Third Quarter Production
Average production for the third quarter was 2,174 barrels of oil equivalent per day (including Cub's WI in KUB-Gas), representing a 16% increase from 1,868 boe/d in the second quarter. This is a 44% increase over the third quarter of 2013 average production of 1,513 boe/d. The increases are due substantially to the M-17 well at KUB-Gas, which averaged 11.9 million cubic feet a day (3.6 MMcf/d Cub WI) during the quarter. KUB-Gas remains at record production levels.
The Company's third quarter exit rate was 2,165 boe/d which increased slightly from the 2,154 boe/d exit rate in the second quarter. Production for the first eight days of October has averaged 2,100 boe/d.
The estimated prices received in Ukraine during the quarter were $10.16/Mcf and $81.47/bbl. The gas price was marginally lower than the $10.23/Mcf realized in Q2 2014. Gas sold in Ukraine by the Company is based on the import price of Russian gas, which in turn is linked to the price of oil. Cub is paid in UAH, making its realized price in USD also subject to exchange rate risk.
Note: the volumes and prices referenced above are subject to minor revisions once final allocations and invoices are received.
Drilling Update
In western Ukraine, the Company is preparing to drill Rusko-Komarovske 23 (RK-23) well, which will target the Miocene Lukovskaya sands, also known as the L Sands.
In eastern Ukraine, as disclosed in our press release of October 2, 2014, KUB-Gas has resumed drilling activities in its Makeevskoye licence with the spud of the M-22 well. The primary target in M-22 is the S6 zone in the Serpukhovian section which has proven very prolific in the M-16, M-17 and O-15 wells. Total time to drill, test and complete is expected to be approximately 80 days. This is the first well of five currently contemplated, with further drilling discussions after management and the Board of Directors approve the 2015 capital budget, expected in December.