Compared to first quarter of 2012, when operating expenses were $90 million, first quarter 2013 expenses increased by 31 percent to $118 million. Additional operating expenses associated with the acquired NAL properties, coupled with higher power costs and inclusion of the Lindbergh operating expenses during the quarter were the primary reasons for the increased costs year over year.
Pengrowth spent $166 million on development activities in the first quarter of 2013 and participated in the drilling of 101 gross wells (65.5 net) within its key focus areas of Greater Olds/Garrington, Swan Hills and Lindbergh, where 26 net delineation wells were drilled. Approximately 87 percent of the first quarter expenditures were spent on drilling, completion and facilities work, with the remainder directed to maintenance, land and corporate activities.
Greater Olds/Garrington Area
Pengrowth holds a large, contiguous land base in the Greater Olds/Garrington area with over 500 gross sections of Cardium rights, extensive infrastructure and significant operatorship.
Activity in the Greater Olds/Garrington area was substantial in the first quarter, with Pengrowth spending $56.9 million on development drilling and facilities. Pengrowth participated in the drilling of 22 gross (13.7 net) wells, targeting the Cardium formation. Completion activities were carried out on 13 gross (7.8 net) wells, with five gross (2.9 net) wells being placed on production during the quarter with combined net production (initial five day average) of approximately 750 boe/d (260 boe/d/net well). The remaining wells are expected to be placed on production in the second quarter of 2013.
In addition, construction began on the expansion of the Lochend battery, in which Pengrowth has a 40 percent working interest and is the operator. Additional compression and oil treating facilities are expected to double production handling capacity to approximately 10,000 boe/d (7,000 bbl/d oil and 18 MMcf/d gas) by the end of April 2013.
Swan Hills Trend
The Swan Hills Trend is a significant conventional oil resource, providing long term, low decline production and cash flow for the Company. The extensive carbonate oil reservoir in this trend provides Pengrowth with opportunities to put its expertise in horizontal drilling and multi-stage acid fracturing of carbonate reservoirs to work on its operated interests in Judy Creek, Carson Creek, Deer Mountain, Virginia Hills and Sawn Lake, where Pengrowth has extensive control of infrastructure.
During the first quarter, Pengrowth spent $36.0 million on development activities, targeting light oil opportunities and drilled a total of four operated wells (3.0 net) and eight partner-operated oil wells (1.6 net). There were three (2.5 net) operated oil wells completed in the quarter with a combined net production test (initial five day average) of approximately 550 boe/d (220 boe/d/net well).
Pengrowth expects to resume drilling operations with one rig after spring break-up late in the second quarter of 2013.
Pengrowth's 100 percent owned and operated Lindbergh property is located in the Cold Lake area of Alberta and encompasses 42.5 sections of land. The Lindbergh thermal project targets the Lloydminster formation, where the bitumen has excellent flow characteristics and oil quality, which translates into higher netbacks than are typically seen in other thermal projects. Based on positive pilot results during 2012, the 12,500 bbl/d first commercial phase of Lindbergh was sanctioned by Pengrowth's Board of Directors in January 2013 and, subject to EPEA approval, is expected to be constructed during 2013 and 2014.
Most Popular Stories
- Boehner Lashes Out Against Ted Cruz, Far Right
- TFA Recruiting DACA Recipients
- Bitcoin or Bad Coin? Warnings Mount Against Virtual Currency
- Cheap Gas Drives Down U.S. Wholesale Prices Again
- Expanding Medicaid Creates Jobs: Study
- Robert Levinson Was on CIA Mission
- Producer Price Index Dropped in November
- Beyonce Releases New Album With No Marketing
- Hawaii Official Who Release Obama Certificate Only Victim of Plane Crash
- 'Dreamers' Hope for Permanent Immigration Status