The Corporation has entered into fixed price derivative contracts for the purpose of protecting its oil and natural gas revenue from the volatility of oil and natural gas prices and the volatility of Canadian to US foreign exchange rates. At March 31, 2013, the Corporation had entered into risk management contracts for approximately 10,000 mbtu/day of natural gas at a fixed price of $4.07/mbtu and for approximately 500 bbls/d of crude oil at a fixed price of $98.22/bbl. Subsequent to the quarter end, and in anticipation of an upswing in natural gas prices, the Corporation cancelled a portion of these natural gas fixed priced contracts, representing 3,750 mbtu/d, at a cost of $0.3 million.
During the three months ended March 31, 2013, the Corporation incurred $1.9 million of capital expenditures on its oil and gas properties in southern Ontario. Included in this amount is $1.1 million expended on onshore drilling and completion activities relating to wells commenced in the fourth quarter of 2012. The Corporation's drill targets in late 2012 were in anticipation of extending the producing area of a select oilfield. Each of the vertical wells encountered dolomitic pay, but the reservoir rock was tight and therefore uneconomic. The Corporation plans to re-enter the second well and deviate the wellbore to a more prospective part of the reservoir.
The Corporation also expended $0.5 million on the acquisition and processing of 2-D and 3-D seismic data, which will be critical in identifying future drill candidates.
2013 Work Program
With the successful completion of the rights offering, the Corporation has updated its 2013 work program to $13.2 million. Subject to market-driven changes to natural gas prices, the Corporation's current intent is to focus its efforts on increasing oil production. Consequently, approximately $11.0 million of the 2013 Work Program will be directed to onshore oil projects, while offshore gas projects are forecasted at approximately $0.8 million. The remaining $1.4 million of the 2013 work program will be incurred on mineral rights required to maintain producing properties, as well as to acquire land for new onshore drilling and seismic programs.
Onshore, the Corporation anticipates drilling and completing eight wells at a cost of approximately $6.7 million. The Corporation will also continue to conduct seismic work, and plans to spend approximately $3.3 million on these activities in an effort to bolster the existing database of seismic information in support of planned future drilling programs. A further $1.0 million will be spent on facility enhancements.
With continued depressed natural gas prices, the 2013 offshore work program is focused on projects that will yield the greatest returns in the short term. The Corporation will be reactivating the company-owned dock located in Port Burwell in conjunction with the planned strategy to abandon a dock and a gas plant located at Port Stanley. This comprehensive project includes dredging of the Port Burwell harbour, and a pipeline exchange to larger diameter pipe, all of which will provide improved access to the central Lake Erie field, and improved production efficiencies throughout Lake Erie operations. Capital costs relating to this project are approximately $0.4 million. A further $0.4 million of the 2013 offshore work program will be incurred for non-discretionary dry dock inspection costs for two vessels.
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