The following charts show the performance of the two new wells compared to the first three wells the Company drilled. Production data has been normalized and days during which the wells were shut-in have been removed from the plots to appropriately compare gas flow rates and field produced condensate to gas ratio.
To view the charts, please visit the following link: http://media3.marketwire.com/docs/320dee_graph.jpg
The Company is in the final stages of drilling operations at its third horizontal Montney well of the winter program at 16-23-60-23W5. The well was drilled to a final total depth of 5,753 meters with a horizontal lateral length of 2,809 meters making it the second longest horizontal well the Company has drilled. Completion operations are anticipated to commence after spring break-up and will consist of a 30 stage slickwater hybrid completion. The well has been tied-in to the Company's Montney facility in order to bring the volumes to market as soon as completion operations conclude.
The low natural gas price environment of 2012 had a significant effect on the Company's natural gas revenues in 2012. Looking forward through 2013 and beyond, the Company is forecasting a steady gradual improvement in the natural gas price environment. With the Company's growing condensate-rich Montney production combined with improved natural gas prices Delphi remains confident in achieving its long term growth targets.
The Company is taking a measured approach to its 2013 capital program with 2013 net capital expenditures estimated to be $50.0 - $55.0 million. Historically, Delphi executes a winter capital program in excess of first quarter cash flow followed by at least one quarter of minimal activity prior to returning to the field with an active fall program.
Delphi has hedged approximately 51 percent of its 2013 natural gas production at $3.27 per mcf to support funds from operations and the Company's ability to pursue its planned capital program.
The Company's recent success at East Bigstone has increased its current production capability to approximately 9,200 to 9,400 boe/d (28 percent NGL's and light oil) with the final Montney horizontal well of the winter program not yet completed. Corporate production volumes for the first half of 2013 have been affected by two unscheduled outages in February and March related to the SemCams gathering system and the K3 processing plant and are anticipated to be affected again in May with a tentatively scheduled maintenance outage at the SemCams KA processing plant. The outages are partially offset by the Montney production performance significantly exceeding budget expectations. The Company will update its existing production guidance for the first half of 2013 as outage details are clarified and Montney well performance is evaluated over the next four to six weeks.
The recent results of the Montney program proves the robust economics of the play and with the large development inventory assembled, the Company is positioned with an asset capable of long term sustainable growth. The current field netbacks of the East Bigstone Montney production is estimated to be $28.00 - $30.00 per boe, more than twice the corporate field netback achieved in 2012.
In 2013 and beyond, we believe the Company will return to the low-cost reserve additions achieved over the previous three years with the major infrastructure build-out at East Bigstone in place and the production performance now being achieved. Our growing condensate and natural gas liquids production is providing a natural hedge against low natural gas prices.
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