Royalty Interest Activity
On an equivalent net basis, 85% of the royalty wells drilled on our lands during 2012 were oil wells (2011 - 78%) due to the oil-prone nature of our lands. As well, over 66% of the equivalent net wells drilled on our royalty lands in 2012 were horizontal wells, up from 59% last year.
Our royalty lands give us exposure to several of the attractive resource plays employing horizontal drilling, including Bakken and Mississippian light oil in southeast Saskatchewan, heavy oil in the Lloydminster area, and Cardium light oil in west-central Alberta. Over one quarter of the royalty wells drilled in the fourth quarter of 2012 had a Cardium target. Continued success with horizontal drilling (for both oil and liquids-rich natural gas) is positive and bodes well for improved well productivity.
As at December 31, 2012, there were 99 (5.9 equivalent net) licensed drilling locations on our royalty lands, compared with 106 (5.4 equivalent net) at the same time last year. We view continued well licence activity as a positive indicator of the ongoing and future development potential on our royalty lands.
ROYALTY INTEREST Three Months Ended Twelve Months Ended WELLS DRILLED December 31 December 31 2012 2011 2012 2011 ------------------------------------------------------------ Equiv. Equiv. Equiv. Equiv. Gross Net (1) Gross Net (1) Gross Net (1) Gross Net (1)----------------------------------------------------------------------------Non-unitized 57 2.6 102 4.9 231 11.6 301 14.4Unitized (2) 30 0.1 60 0.4 200 1.2 322 1.3----------------------------------------------------------------------------Total 87 2.7 162 5.3 431 12.8 623 15.7--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Equivalent net wells are the aggregate of the numbers obtained by multiplying each gross well by our royalty interest percentage.(2) Unitized wells are in production units wherein we generally have small royalty interests in hundreds of wells.
Working Interest Activity
Our development plans are primarily oil related, and are focused almost entirely on our own mineral title lands, where we have chosen to invest our own capital on attractive, low-risk opportunities.
In the fourth quarter of 2012, capital expenditures amounted to $7.7 million, the majority of which was spent to complete, equip, and tie-in wells drilled in southeast Saskatchewan during the third quarter. We participated in the drilling of seven (1.3 net) wells with a 100% success rate.
-- In Saskatchewan, we participated in the drilling of two (0.3 net) vertical and one (0.1 net) horizontal Frobisher oil wells, as well as two (0.6 net) Bakken horizontal oil wells.-- In Alberta, we participated in one (0.1 net) horizontal Viking light oil well at Redwater and one (0.2 net) horizontal Cardium oil well at Minnehik Buck Lake.
This drilling activity had little effect on production levels in the fourth quarter but is expected to add to our production base in 2013.
WORKING INTEREST WELLS DRILLED Three Months Ended Twelve Months Ended (1) December 31 December 31 2012 2011 2012 2011 ------------------------------------------------------------ Gross Net Gross Net Gross Net Gross Net----------------------------------------------------------------------------Oil 7 1.3 9 3.8 36 13.5 29 11.1Natural gas - - - - - - 3 0.4Other - - 1 0.1 1 0.6 2 0.1----------------------------------------------------------------------------Total 7 1.3 10 3.9 37 14.1 34 11.6--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Excludes royalty interest portion on properties where Freehold has both a working interest and a royalty interest. The royalty interest portion is included in equivalent net wells in the Royalty Interest Wells Drilled table above.
