2013 Capital Plan
For 2013, our initial capital program is structured to build on the success of 2012. The execution of this plan began in late 2012, when we accelerated the spending of $100 million of capital from 2013 to the end of 2012. The accelerated capital should allow us to minimize field operation interruptions and make efficient use of oil field services during the active winter drilling season in order to add new production in the first quarter of 2013. This initial accelerated capital, together with projected 2013 capital of $675 million, is expected to allow us to grow our average annual production by 8% to 12% while targeting relatively flat year-over-year exit production.
We anticipate 71% ($480 million) of our 2013 capital will be directed to drilling, completion and tie-in activities with an additional $140 million being spent on facilities, optimization, workover capital and sustaining capital. The 2013 capital plan is expected to deliver an average daily production rate of 46,000 to 48,000 boepd and exit 2013 production of approximately 49,000 to 52,000 boepd, with an 85% liquids weighting. Our initial capital plan (including the acceleration of $100 million into 2012) is materially lower than previous years, which we believe to be prudent given the current price volatility and wider light oil differentials being experienced by the industry. Our capital plan may be adjusted throughout the year to take into account changes to realized prices and service costs.
From a capital allocation standpoint, we will focus on continuing to grow our production in the Cardium which, like our Bakken and Conventional business units, should become cash flow positive in 2013. The Cardium development program will focus on pad-drilling in Brazeau, Lochend and West Pembina, to shorten on-stream cycle times and reduce capital costs for surface leases, drilling, completions, equipping and tie-ins. We will also continue to invest in our cash flow positive assets in the Bakken and Southeast Saskatchewan. The Bakken program balances facilities and infrastructure spending with cluster development drilling to maintain strong capital efficiencies and a low operating cost structure. We have also allotted capital for the commercial expansion of our EOR pilots to build upon the encouraging results to date. Finally, we will invest in developing our new plays in Alberta that will drive future growth.
Our 2013 drilling activity will see a total of approximately 129 wells drilled, broken down by operating area as follows:
---------------------------------------------------------------------------- Capital New WellsArea ($million)(1) (Net)(1)----------------------------------------------------------------------------Bakken 85 32----------------------------------------------------------------------------Cardium 290 67----------------------------------------------------------------------------SE Saskatchewan Conventional 27 16----------------------------------------------------------------------------Alberta / BC (Emerging Plays) 78 14----------------------------------------------------------------------------Total 480 129----------------------------------------------------------------------------(1) 2013 capital spending estimates and associated drill counts do not include the acceleration of $100 million of 2013 into December 2012.
