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Short term production rates can be influenced by flush production effects from fracture stimulations in horizontal wellbores and may not be indicative of longer term production performance. Individual well performance can vary.
DRILLING INVENTORY
The Company's drilled and drill ready light oil horizontal drilling inventory is outlined below:
Cardium Prospect Area (number of drilling locations) Gross Net (i)Garrington 115 87Willesden Green 119 86Ferrier 27 17Pembina 50 17 -----------------------------Total Cardium inventory 311 207Cardium oil wells drilled to February 22, 2013 79 59 -----------------------------Remaining Cardium inventory 232 148Horizontal prospect inventory in other zones 108 62----------------------------------------------------------------------------Remaining Cardium and other zone inventory, February 22, 2013 340 210----------------------------------------------------------------------------
(i) Net is net revenue interest
The Company's remaining Edmonton Sands shallow gas drilling inventory is now estimated to be 542 gross (307 net) locations.
The recently completed reserves report effective December 31, 2012, and summarized herein, includes proved plus probable reserves for 48 net Cardium horizontal oil, 0.75 net other horizontal oil and no Edmonton Sands locations. There are a further 100 net Cardium horizontal and 61 net other horizontal light oil locations that are not booked in the GLJ reserves report.
PRODUCTION
The property dispositions announced in the fourth quarter of 2012 have all been completed. Net of all of the properties sold, the Company estimates first quarter 2013 production to be approximately 3,900 to 4,200 BOED of which 55% is from high netback Cardium properties. Oil & NGL production is estimated to be 43% of the total BOED production in the quarter. The Company shut-in 900 Mcfd of natural gas production which was uneconomic to produce in the current price environment.
RESERVES
GLJ Petroleum Consultants, an independent evaluator, has completed a reserves report (the "GLJ Report") of all the Company's oil and natural gas properties effective December 31, 2012, prepared in accordance with procedures and standards contained in National Instrument 51-101 of the Canadian Securities Administrators ("NI 51-101") and the Canadian Oil and Gas Evaluation ("COGE") Handbook. The reserves definitions used in preparing the report are those contained in the COGE Handbook and NI 51-101. As of December 31, 2012, the Company had 6.9 MMBOE proved developed producing ("PDP") reserves (39% oil & NGL), 10.3 MMBOE total proved ("TP") reserves (43% oil & NGL) and 17.8 MMBOE total proved plus probable ('"P&P") reserves (48% oil & NGL). The reserves report reflects the disposition of $74 million in properties in 2012, the previously announced termination of the Company's shallow gas drilling commitment and the negative impact of significant reductions in natural gas price forecasts over the past year. The percentage of PDP, TP and P&P total BOE reserves volumes from the Cardium formation represent approximately 59%, 66% and 75% respectively. By product, approximately 96% of P&P oil and NGL reserves and 55% of P&P natural gas reserves (primarily solution gas) are in the Cardium formation. The Cardium P&P NPV 10% value is approximately 90% of the total Company P&P NPV 10% value. The Edmonton Sands shallow gas project represents approximately 5% of the total Company P&P NPV 10% value.
