First quarter production of 321,000 boe/day reflected increased heavy oil production, offset by a planned reduction in dry gas production and reduced volumes from the partner-operated Terra Nova facility, which has returned to production following its 2012 turnaround.
The Company's average realized pricing for its crude oil, natural gas liquids and bitumen in the first quarter was $68.32 per barrel, compared to $87.11 per barrel in the first quarter of 2012. U.S. realized refining margins averaged U.S. $20.47 per barrel compared to U.S. $14.14 per barrel in the same period in 2012.
"The industry has been challenged by volatile commodity price and location differentials, however as part of our focused integration strategy we have made strategic investments in our Downstream infrastructure that allow us to diminish the impact of market changes," said CFO Alister Cowan.
KEY AREA SUMMARY AND GROWTH UPDATE
THE FOUNDATION BUSINESS
-- Heavy Oil
The Company continued to rejuvenate its Heavy Oil business with a growing focus on thermal projects.
Total production from heavy oil and thermal projects over the quarter was about 122,000 bbls/day compared to approximately 106,000 bbls/day in the first quarter of 2012. Total thermal developments, including Tucker, produced about 48,000 bbls/day, up from 30,000 bbls/day a year ago.
Combined average volumes of approximately 18,000 boe/day were maintained at the Pikes Peak South and Paradise Hill thermal projects, ahead of their 11,500 bbls/day total planned design rates.
Construction on the 3,500 bbls/day Sandall thermal development is now approximately 55 percent complete, with initial drilling underway and first production planned in 2014.
Initial site work continued at the 10,000 bbls/day commercial thermal project at Rush Lake, which remains on track for first oil in 2015. The first single well pair pilot continues to produce and progress is being made towards startup of a second well pair, scheduled for the second quarter of 2013.
Thirty-eight horizontal wells were drilled in the first quarter out of a planned 140-well program for 2013, along with 55 Cold Heavy Oil Production with Sand (CHOPS) wells out of a planned 200-well program.
-- Western Canada
The Company continued laying the foundation for the transformation of its Western Canada business with its ongoing shift towards oil and liquids-rich resource plays.
Oil Resource Plays
A total of 45 horizontal wells (gross) were drilled on five oil resource plays in the Bakken, Lower Shaunavon, Viking, Cardium and at Rainbow Muskwa in the first quarter.
Two vertical wells drilled in 2012 at the Slater River Canol play in the Northwest Territories were completed and tested during the first quarter. Results are being evaluated and community consultations are underway for a proposed 2013/2014 program.
Approximately half of a 40-kilometre all-season access road was built during the 2012-2013 winter program, with operations scheduled to resume in the third quarter.
Gas Resource Plays
Ten liquids-rich wells were drilled at the Ansell liquids-rich gas play, with 12 gas wells completed by the end of the first quarter. Production at Ansell reached more than 14,000 boe/day in the first quarter.
GROWTH PILLARS
-- Asia Pacific Region
The Liwan Gas Project in the South China Sea continues to advance as scheduled towards first gas in the late 2013/early 2014 timeframe. Overall, approximately 85 percent of the project was complete by the end of the first quarter.
