7th Jul 2016 10:30
LONDON (Alliance News) - Northern Petroleum PLC on Thursday said its next step is to increase production further at its Canadian assets to not only cover costs, but also to create operating cash flow for future investment, as it plans its third quarter work programme.
The oil and gas company said net average oil production for the last week of June came in at 500 barrels of oil per day, having previously set a target of producing more than 400 barrels of oil per day. However, the production rates in both May and June were impacted by unusually heavy rain, which led to trucked wells being shut in as road conditions restricted the trucking of oil to the 13-36 battery for sale, and meant average production in both months was around 300 barrels of oil per day.
The cost of this initial workover programme, which brought production up to more than 400 barrels of oil per day, from the previous 150 barrels of oil per day, was budgeted to be more than USD1.0 million, Northern Petroleum said, but actually cost half the budgeted amount at USD500,000.
Northern Petroluem said three wells from the 9-25 battery are now on production, after the company received final approvals from the Alberta Energy Regulator, and three further wells tied in to the battery are planned to be brought into production following remedial work on the pipeline.
Northern Petroleum added that the first refund of abandonment deposit from the Alberta Energy Regulator is due this month, and said it is forecasting being returned around USD1.4 million in four consecutive monthly installments.
The company noted that it was in the process of planning its third quarter work programme, which will have the objective of improving operating synergies and costs, and increasing production through the restart of three waterfloor wells at the 9-25 facility. These wells need some repair and testing work, which Northern Petroleum said it plans to do this summer.
The company is also undertaking pipeline engineering studies to tie the two main batteries together and reduce trucking requirements and periods of future production downtime.
Meanwhile, a subsurface review is also being undertaken to high grade well workover candidates and well sidetrack opportunities for the winter work programme, to further increase production. As part of this, Northern Petroleum is considering recompleting some of its well in the Virgo region for the winter work programme.
"The company has achieved its initial goal of increasing production from the Rainbow assets to more than 400 barrels of oil per day. This production, combined with the rise in oil price since February, is providing material monthly revenue and cash flow.The next step for the company is to increase production further and not only cover group costs, but also create net operating cash flow for future investment," said Chief Executive Keith Bush.
Shares in Northern Petroleum were up 5.2% at 3.55 pence on Thursday.
By Hannah Boland; [email protected]; @Hannaheboland
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