CALGARY, ALBERTA -- (Marketwired) -- 06/17/13 -- Spyglass Resources Corp. ("Spyglass", or the "Company") (TSX: SGL) announces that the board of directors (the "Board") has approved the June 2013 monthly cash dividend of $0.0225 per share payable on July 15, 2013 to shareholders of record on June 27, 2013. The ex-dividend date will be June 25, 2013.
The dividend policy of Spyglass is at the discretion of the Board and will be reviewed monthly in the context of a number of factors including current and forecast commodity prices, foreign exchange rates, an active commodity price risk management program, the status of current operations and future investment opportunities. Spyglass dividends paid on common shares will be designated as "eligible dividends" for Canadian income tax purposes.
Spyglass Commences 2013 Drilling Program
Spyglass' 2013 capital budget is approximately $72 million, including the $12 million spent in the first quarter of 2013. The capital program will be focused on low risk, light oil development opportunities intended to offset the Company's natural production declines (estimated at 20 percent) and to sustain the monthly cash dividend to shareholders. The program includes drilling 21 (18 net) development wells in addition to a low cost workover and optimization program.
The 2013 program is expected to employ three drilling rigs, with the first rig having recently commenced the drilling program in the Matziwin area of southern Alberta, targeting the Pekisko and Glauconite formations with horizontal wells. Once conditions in the field allow for rigs to be mobilized, Spyglass plans to deploy a second drilling rig in the Halkirk-Provost area of central Alberta to execute the Viking light oil drilling program. A third drilling rig (expected to commence drilling in the third quarter) is planned for Northern Alberta where Spyglass is planning a Cadomin gas well at Noel in northeast BC.
Risk Management Update
Spyglass uses a commodity price risk management program to mitigate the impact of crude oil and natural gas price volatility on cash flow which is intended to support the Spyglass dividend and capital program. Spyglass actively hedges production on a rolling basis 12 to 18 months forward using a combination of fixed price and participating products.
For June to December 2013, Spyglass has approximately 46% of its estimated crude oil production hedged at an average fixed price of WTI C$94.00/bbl (including both Canadian and US dollar denominated contracts and excluding call options) and approximately 49% of its estimated natural gas production hedged at an average fixed price of $3.49/Mcf. Spyglass has protected an additional 11% of its estimated June to December 2013 natural gas production by purchasing put options with an average floor price of $3.12/Mcf.
For calendar 2014, Spyglass has hedged approximately 29% of its estimated crude oil production at an average fixed price of WTI C$93.47/bbl and approximately 35% of its estimated natural gas production at an average fixed price of $3.75/Mcf.
For further detail on our risk management program and a list of financial derivative contracts as of June 17, 2013, please refer to the hedging section on www.spyglassresources.com.
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