CALGARY, ALBERTA--(Marketwire - Sept. 13, 2012) - Artek Exploration Ltd. (RTK.TO) ("Artek" or the "Company") is pleased to provide the following operational update.
The Company has successfully drilled and completed its fourth of a seven horizontal well program (60% working interest) planned for 2012 at 13-33-87-23W6 at the South end of its Doig natural gas and condensate pool in the Inga area of British Columbia. Preliminary results after a 103 hour test that was conducted in-line, the horizontal well was still cleaning up and flowing at a restricted average rate of 6.7 mmcf/d of natural gas (26% load C3) and 1,503 bbls/d of condensate or a total of 2,623 boe/d (2,335 boe/d net of load) over the last 6 hours at a flowing pressure of 1,118 PSI. The well was drilled to a lateral distance of approximately 1,500 meters and was completed with a 14 stage propane fracture program and management is very encouraged by the results from this pool extending well.
The tie-in of the sales line to a new deeper cut processing plant from Artek's operated facility at Inga has now been completed. In addition to providing the Company with two plant options to reduce plant related interruptions, the new deeper cut facility is expected to result in the plant liquids recovery increasing by 15 bbls/mmcf to approximately 30 to 35 bbls/mmcf, in addition to the free liquids recovered at the well.
Earlier in the year Artek reported that its second horizontal Inga well of 2012 had been dually completed in both the Doig and the Charlie Lake formations. The Company is unable to dually produce the well due to complications with producing a natural gas/condensate zone along with an oil zone up the same well bore. As a result approximately 315 boe/d (190 boe/d net) of Doig production has been suspended so the uphole Charlie Lake zone which was perforated in the vertical section of the well can be produced up tubing and evaluated for further capital investment. After four days the Charlie Lake zone was flowing at approximately 200 to 220 bbl/d of light oil (120 to 130 bbl/d net). The Company has 19 (11 net) sections of Charlie Lake mineral rights at Inga that it is looking forward to evaluating with the drill-bit in early 2013.
The third horizontal well of the year at Inga was drilled out as a horizontal re-entry of a vertical well to a lateral distance of 1,200 metres earlier in the summer. Mechanical difficulties were experienced during the early stages of the completion and although management was encouraged by the results, the completion of the operation must wait for slim-hole tools to conduct repairs which management now estimates will take approximately 8 to 10 weeks.
The Company is currently drilling out the lateral leg on its fifth horizontal well of 2012 at Inga A16-10-88-23W6M off the pad that it drilled its first Doig horizontal of the year which Artek reported tested at approximately 2,520 boe/d (1,700 bbls/d of condensate) net of load at 1,046 PSI after an 80 hour clean-up test period. The well is expected to be completed in early October. Up to two additional horizontal wells in Artek's Inga gas/condensate drilling program are planned from late September through November with all wells anticipated to be completed and on production by year end.
Average test rates for the Company's first seven horizontal Doig wells in the Inga area have been consistently strong at over 2,100 boe/d averaging approximately 1,300 bbls/d of condensate despite variations in horizontal length, frac density, and frac size. Longer horizontals with larger and more fracs have yielded the best well results to date. Artek's first 2011 Inga well at 5-11-88-23W6 drilled in early 2011 has produced for a little over a year now and cumulative production for the first twelve months was approximately 117,000 (70,200 net) bbls of liquids and 918 (551 net) mmcf of natural gas or approximately 270,000 (162,000 net) boe. The well realized approximately $10.6 ($6.4 net) million of cash flow over its first 12 months of production and paid out in roughly 6.5 months.
In addition to the Inga program, the Company anticipates starting its 4 (1.6 net) well development program targeting Glauconite oil at Leduc Woodbend in mid-September which is anticipated to be completed in the fourth quarter of 2012 with production from the property forecast to increase from about 380 boe/d to approximately 500 to 550 boe/d net by year end.
The Company's total current production based on field estimates is in excess of 3,000 boe/d, of which an estimated 40% is oil and natural gas liquids.
Credit lines with the Company's lender have been recently increased to a $65 million operating line and a $10 million development line for total credit facilities of $75 million.
The Company expects to provide a further operational update in early October and is scheduled to release its 2012 third quarter results after close of market on November 7, 2012.
Forward Looking Statements: This document contains forward-looking statements. Management's assessment of future plans and operations, future results from operations, production estimates, commodity mix, initial production rates, drilling plans, timing of drilling and tie-in of wells, productive capacity of new wells, and financial capacity to carry out its planned 2012 capital program may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, the inability to fully realize the benefits of the acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward looking statements. Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although Artek believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Company can give no assurance that such expectations will prove to be correct.
In addition to other factors and assumptions which may be identified in this document and other documents filed by the Company, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which Artek operates; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; Artek's ability to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility construction and expansion; the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and Artek's ability to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or at the Company's website (www.artekexploration.com). Furthermore, the forward looking statements contained in this document are made as at the date of this document and the Company does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
BOE Conversions: Barrel of oil equivalent ("BOE") amounts may be misleading, particularly if used in isolation. A BOE conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel. This conversion ratio of six thousand cubic feet of natural gas to one barrel is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion ratio on a 6:1 basis may be misleading as an indication of value.
Test results and initial production rates: the pressure transient analysis or well test interpretation has not been carried out and thus certain of the test results provided herein should be considered to be preliminary until such analysis or interpretation has been completed. Test results and initial production rates disclosed herein may not necessarily be indicative of long-term performance or of ultimate recovery.
Artek is a crude oil and natural gas exploration, development and production company headquartered in Calgary, Alberta, Canada. Artek's shares trade on the Toronto Stock Exchange under the symbol "RTK".
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
Artek Exploration Ltd.
President and Chief Executive Officer
Artek Exploration Ltd.
Vice President Finance and Chief Financial Officer