Anderson Energy Ltd. has announced its operating and financial results for the three and nine months ended September 30, 2010.
Repositioning for oil production growth continues to be the primary focus of the Company in light of the current and projected weakness in natural gas pricing. As detailed in the following discussion, oil production from the Cardium horizontal oil drilling program initiated this summer is coming on stream in the fourth quarter. The Company is making progress in its efforts to acquire additional Cardium acreage and implement drilling and completion initiatives to lower costs and improve well productivity and reserves.
Highlights:
As of November 15, 2010, the Company has drilled 20 gross (13.5 net) Cardium horizontal oil wells with a 100% success rate, of which 16 gross (11.0 net) wells have been placed on production. In addition, the Company has two gross (1.0 net) Cardium wells producing back completion fluid that are expected to add new oil production before December. The Company has two gross (1.5 net) Cardium wells scheduled to be completed this week. The Company expects to be active in the field with two rigs drilling Cardium horizontal oil wells until spring breakup. The Company has increased its Cardium drilling plans for 2010 and now estimates it will drill 24 gross (17.2 net) Cardium horizontal wells in 2010.
Third quarter production was 7,292 BOED, down 6% from the second quarter of 2010 due to extremely wet weather that delayed the Company's Cardium and Westpem projects. The Company started to ramp up its Cardium production in the third week of October and estimates average October production was approximately 8,300 BOED with new Cardium wells coming on stream in the third week of October. In the fourth quarter of 2010, oil and NGL production is estimated to be 25% of total production and 50% of total revenue at currently forecast prices. New oil production is brought on stream at significantly higher netbacks than natural gas.
The Company's Cardium prospective land is 94 gross (53.6 net) sections. Based on a drilling density of three wells per section, the drilling inventory is potentially 282 gross (161 net) Cardium horizontal oil wells. The Company has advanced 80 gross (48.0 net) drilling locations which have been drilled or are planning to be drilled in the Garrington, Pembina, Willesden Green and Ferrier areas. The Company's exposure in the Cardium oil horizontal play has the potential to significantly increase future oil production.
In the second half of 2010, the Company drilled two gross (2.0 net) and recompleted four gross (4.0 net) existing wells in Westpem. This production came on stream late in the third quarter of 2010 and early in the fourth quarter of 2010. Current production is 1,200 BOED, up substantially from the first quarter average of 700 BOED.
On October 25, 2010, the Company announced an extension of the commitment date to drill the remaining 74 wells under an Edmonton Sands farm-in agreement from December 31, 2010 to March 31, 2012.
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