In July, forest fires forced the shut-in of production at the Larne field and at Steen River. Further, Pembina Pipeline Corporation initiated maintenance and upgrades commencing mid-August, 2012 which resulted in disruption in service and reduced pipeline capacity. The above unplanned disruptions and the scheduled plant turnaround at Strategic’s Steen River facilities resulted in total disruptions in service that equated to seventeen (17) days in downtime. Routine production operations were conducted at the producing Taber and Conrad properties.
Corporate production averaged 1,930 boe/d in the third quarter of 2012 as compared to 2,583 boe/d in the second quarter of 2012. The reduction in the production is mainly attributed to the downtime at Steen River and shut-in gas production at Larne. Corporate production decline is estimated at 160 boe/d for the third quarter which equates to an annualized decline of approximately 25%.
Strategic continued the development of light oil opportunities at its Steen River core area. Strategic has drilled and completed thirteen (13) wells with a 100% success rate utilizing two drilling rigs in 2012. Drilling operations resumed in August 2012 at Steen River with two dedicated rigs. In the third quarter four (4) vertical wells were drilled. The 100/02-27 Sulphur Point vertical well is producing 40 boe/d and 102/03-27 Keg River vertical well is producing 260 boe/d. The remaining two vertical wells drilled in the third quarter will be on production in November.
At Steen River, continued success from the 2012 drilling programs continues to provide follow up drilling locations. Strategic will drill four (4) additional wells in the fourth quarter of 2012. The Corporation plans to drill a minimum of ten (10) wells in first quarter 2013. The 2013 drilling program is planned to extend and to explore the Keg River and Sulphur Point across the Steen Astrobleem from North Marlowe to West Marlowe testing several structural features. Additional work in the first quarter 2013 includes 3D seismic and infrastructure to expand Steen’s production gathering access.
Plans for further activity are proceeding at Maxhamish. Strategic continues to work with its operating partner, in contemplation of additional evaluation and stimulation activity in the first quarter of 2013. At Amber, the Corporation continues its evaluation of several opportunities. The Corporation has deferred its Amber program to 2013.
The Corporation is on track with securing transporting oil by rail in fourth quarter 2012. Rail will help to minimize production downtime due to pipeline disruptions and will also provide an upside to pricing from exposure to WTI and Brent bench marks.
“With three new wells coming on production in November, the Corporation is on target to meet our 2012 exit rate guidance of 3,000 boe/d.”, said Gurpreet Sawhney, President and CEO of the Corporation.
Strategic is a well-capitalized junior oil and gas company committed to growth by exploiting its light oil assets in Canada. Strategic is primarily focused on implementing development plans for its light oil properties, while continuing to review other high impact light oil resource plays. Strategic’s common shares trade on the TSX Venture Exchange under the symbol SOG.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.