Lease construction for the TT12 horizontal well was completed in the first quarter and the well was subsequently spud on April 7, 2013 and is currently awaiting completion scheduled for mid-May 2013. During the balance of 2013, the Foradex 14 Rig will be used to drill an additional five (4.3 net) wells on the BBT Concession and a vertical exploration well at El Bell located on the Sud Remada Permit. The resumption of continuous drilling at the BBT Concession in Q2 is expected to increase production volumes from the concession, on which a well has not been drilled since December 2012. Q1 average gross production from the BBT Concession was approximately 3,120 barrels of oil per day (1,680 net).
Facilities and equipment expenditures in the first quarter included the civil lease construction of the BBT production facility and procuring long lead items such as pipe for the gathering system, tanks and separators.
Following the former partner's election in March 2013 not to proceed with immediate field development at the Cosmos Concession and thereby terminate their optional right to earn an interest in the Cosmos Concession, the Company approved a capital plan that includes shooting a 275 km(2)3-D seismic survey which will provide modern data over the entire Cosmos development area including 14 exploration prospects. This work commenced in May 2013 and management expects it should lead to drilling an appraisal well on the concession in the first half of 2014.
Chinook's budgeted production for 2013 remains at 9,500-10,200 barrels of oil equivalent per day with a 40% oil weighting. Cash flow for 2013 is expected to be $95-$100 million on a $102-$107 million capital program split approximately 60% and 40% between Tunisia and Canada. Year-end net debt is expected to be $60-$65 million on combined credit facilities of $161.5 million.
During the last two years, Chinook has actively pursued and implemented multiple strategic initiatives focused on improving its ability to deliver profitable growth for its shareholders and improve its balance sheet to ultimately strengthen its valuation. Although the formal process involving the marketed sale of Canadian non-core assets has been completed, Chinook will continue to evaluate all options and opportunities to unlock value from the various components of its existing asset portfolio over the remainder of 2013. In addition to focusing on organic growth in the Company's core areas of Grande Prairie and Tunisia, efforts to bolster value will include the assessment of acquisitions in Chinook's core operating areas, dispositions of non-core assets, prospective business combinations or the split of the Company's domestic and international businesses.
2013 is shaping up to be an exciting and pivotal year at Chinook and the Company is looking forward to providing updated results throughout the year.
About Chinook Energy Inc.
Chinook is a Calgary-based public oil and gas exploration and development company that combines high quality natural gas-weighted assets in Western Canada with an exciting high growth oil business onshore and offshore Tunisia in North Africa.
In the interest of providing shareholders and potential investors with information regarding Chinook, including management's assessment of the future plans and operations of Chinook, certain statements contained in this news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance. In addition, statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this news release contains, without limitation, forward-looking statements pertaining to: the Company's belief that is has the ability to commodity switch between oil and natural gas opportunities within its Canadian portfolio of drilling opportunities; the volume and product mix of Chinook's oil and natural gas production on certain newly drilled wells, and the anticipated production volumes therefrom; the anticipated timing of the TT10 well being brought back on production; the timing of the scheduled completion of the TT12 horizontal well; the number of additional wells to be drilled and the timing thereof on the BBT Concession and the Sud Remada permit, and in the case of the BBT Concession, the expected increase in production volumes resulting therefrom; plans for shooting a seismic survey on the Cosmos Concession; future results from operations and operating metrics; and future development, exploration, acquisition and development activities (including drilling plans) and the timing thereof and related production expectations; as well as management's future expectations regarding production, cash flow, capital expenditures, net debt and credit facilities set out under the heading "Outlook".
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