CALGARY, ALBERTA -- (Marketwire) -- 01/31/13 -- Crocotta Energy Inc. ("Crocotta" or the "Company") (TSX: CTA) is pleased to announce 2013 Guidance and Operations Update.
Crocotta has grown organically from 2,200 boepd at the start of 2010 to over 8,500 boepd solely by drilling its current Bluesky and Cardium projects at Edson and its Montney project at Dawson. Average capital efficiency for the projects (on-stream cost divided by year #1 average production) has been less than $15,000 per boepd with finding and development costs on a corporate level averaging $12 per boe. Returns on the liquids-rich Bluesky and Montney are over 100% with paybacks of approximately 1 year and the Cardium oil project at Edson exceeds these metrics. Although these combined projects average 65% gas and 35% liquids, returns rival pure oil plays as a result of low operating costs ($5 per boe), high productivity, large recoverable reserves, and reduced on-stream costs which are, in part, a result of Crocotta's drilling and completion efficiencies gained over prior periods. Crocotta's 2013 budget will focus on these 3 development plays.
CAPITAL PROGRAM AND GUIDANCE
Crocotta has approved a budget that entails spending approximately $100 million in 2013 with the focus on Cardium oil at Edson, Bluesky liquids-rich gas at Edson, and Montney liquids-rich gas at Dawson. The budget will be spent equally between the first and second half of the year and be flexible to allow Crocotta to maintain its strong financial position. In addition, such flexibility will allow Crocotta to maximize returns by being able re-allocate between projects based on relative success as well as react to short to medium term fluctuations in commodity prices.
Crocotta estimates average 2013 production to be between 9,200 and 9,500 boepd (35% oil and natural gas liquids and 65% natural gas) with exit 2013 production reaching 10,500 boepd.
Edson will receive approximately 60% of the overall budget with almost half of the entire year budget to be spent on horizontal development of Cardium oil. Crocotta has budgeted to drill 14 net horizontal Cardium oil wells and 2.2 net liquids-rich Bluesky gas wells. Liquids-rich Montney will receive approximately 30% of the budget with its new sweet gas plant constructed in the first half of the year and 4 net horizontal wells scheduled to be drilled in the second half of the year. New projects and land will receive the balance of the allocated capital.
Crocotta currently has two drilling rigs in operation at Edson with one drilling Cardium horizontals and one drilling Bluesky horizontals. Crocotta is currently completing 1(0.6 net) previously drilled Bluesky wells and 2 (2.0 net) Cardium wells at Edson. Production rates of the wells and commentary on the overall program will be released in future operations updates.
Crocotta exited 2012 with approximately $80 million of net debt compared to its current bank credit facility of $140 million. The 2013 budget allows Crocotta to maintain its strong financial position.
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