TOURMALINE REPORTS 167% RESERVE GROWTH IN 2010 AND PROVIDES OPERATIONS UPDATE
Tourmaline has generated very strong growth in all reserve categories in 2010. Proved Developed Producing reserves grew to 38.9 mmboe in 2010, a 126% increase over year end 2009 (65% per share year over year), Total Proved reserves grew to 93.0 mmboe in 2010, a 167% increase over 2009 (95% per share) and Proved Plus Probable reserves grew to 158.2 mmboe in 2010, a 166% increase over 2009 (94% per share)
Tourmaline’s total 2P reserves after two years of operation is now larger than Duvernay Oil Corp.’s 2P reserves in its final 2008 reserve report.
Finding, Development and Acquisition costs were $9.58/boe for Proved Plus Probable reserves in 2010 ($15.55/boe with changes in future development capital (FDC)), and $15.61/boe for Total Proved Reserves in 2010 ($21.50/boe with FDC). These costs include $339.4 million for land and facilities ($5.25/boe of the $21.50/boe Proved costs including FDC) as the Company completed several large land focused acquisitions and embarked upon several major facilities projects in 2010 as it assembled its extensive EP portfolios.
Finding and Development costs were $11.02/boe for Proved Plus Probable reserves ($14.19/boe with FDC) and a $14.78/boe for Total Proved reserves ($19.48/boe with FDC).
The 2010 independent reserve report includes 263 future locations, approximately 5% of the 5,000 locations currently in the Company’s drilling inventory.
Oil and natural gas liquids 2P reserves grew to 20.0 mmboe at year end 2010.
Current production is approximately 24,000 boepd, consisting of 128.4 mmcfpd of natural gas and 2,600 bopd oil, condensate and liquids.
The two major ongoing facility projects, the Minehead AB gas plant and the Dawson BC pipeline interconnect to the Tourmaline Sunrise plant, will grow total production to 28,500 boepd or greater by early April, in excess of originally projected levels for second quarter 2011. These two projects will bring 25 completed, shut-in gas wells on-stream. Fourth quarter 2010 production averaged 22,953 boepd, a
217% increase over fourth quarter 2009 average production of 7,248 boepd. The Company is expecting full year average production of 27,675 boepd for 2011, which will represent 55% growth over 2010 average production of 17,856 boepd.
The Company continues to make progress on further reducing already top decile operating costs. Fourth quarter 2010 operating costs were $5.51/boe, down 12% from third quarter 2010 costs of $6.24/boe and 31% from fourth quarter 2009 costs of $7.94/boe. Tourmaline has numerous projects underway throughout the EP portfolio to further reduce operating costs for 2011.
Tourmaline is currently operating 6 drilling rigs and will maintain those levels until Spring break-up in March. A total of 14 gas wells and 2 oil wells have been drilled thus far in 2011.
Alberta Deep Basin
A total of 10 vertical gas wells and 3 horizontal gas wells have been drilled to date in the first quarter of 2011. The Company is operating 5 drilling rigs in the Deep Basin. The Company expects to have a total of 14 horizontal wells drilled by break-up with the Phase 1 horizontal assessment program including 6 Cardium, 2 Wilrich, 2 Falher, 2 Notikewan and 2 Cadomin horizontals drilled, completed and tested by April 1. Initial results have been very strong with a 750 boepd Cardium horizontal in greater Wild River and a 2200 boepd Falher horizontal at Musreau amongst the high deliverability, liquids rich gas wells tested thus far. An additional 18-20 Deep Basin horizontals are planned throughout the Deep Basin complex in the second half of 2011. The Company is now estimating an inventory of up to 1500 horizontal locations on its extensive Deep Basin EP portfolio, complementing the 3100 vertical drilling locations already in inventory.
The main Deep Basin facilities project in Q1 is the Minehead gas plant and associated gathering system. The project remains on schedule, with all components of the plant on-site and first production expected by the beginning of April. The Minehead plant will bring approximately 30-35 mmcfpd of net shut-in gas volumes on-stream.
Peace River High
Tourmaline expects to drill and complete up to 20 horizontals in the greater Dawson Sunrise liquids rich Montney complex during 2011. The Company will operate one drilling rig on a continuous basis through the balance of the year. Average per well drill times are now down to 12-13 days. The Sunrise 5-14-80-16W6M well tested at a stable rate of 14.2 mmcfpd in February, the highest deliverability well in the Company’s Dawson-Sunrise program thus far.
The principal facilities project in Dawson-Sunrise in the first quarter is the Dawson interconnect pipeline and compressor project. This project will bring 20 mmcfpd of shut-in gas and associated liquids to the Tourmaline operated gas plant at Sunrise. A late March start-up for this pipeline is currently anticipated.
At Spirit River, a total of 5 horizontals have now been drilled in the Triassic Charlie Lake formation. Three of these wells are on production at average initial rates of 275 bopd and 0.75 mmcfpd, the fourth and fifth wells are currently being completed. The Spirit River battery expansion was completed in late January to accommodate these rapidly increasing production volumes.