ENERGY TRUSTS / EnerMark Launches 1999 Capital Program with Focus on Natural Gas
CALGARY, Jan. 20 /CNW/ - EnerMark Income Fund is pleased to announce
that it has begun an aggressive capital program that will focus primarily on
natural gas development during the first two quarters of 1999. During the
period, the Fund plans to invest $10.9 million on projects expected to add
approximately 13 million cubic feet per day (MMcf/day) of natural gas
production during the course of the year. EnerMark has a $200 million credit
facility of which $15.9 million was unutilized as at December 31, 1998.
With the program underway, the Fund has already completed a successful 12
well shallow natural gas infill drilling program at Bantry, Alberta.
Anticipated gas production from this program is approximately 500 mcf/day net
to the Fund from the Milk River zone.
At Valhalla in northwestern Alberta, compression capacity has been added
resulting in an increase of 500 mcf/day net to the Fund. Directly south of
the Valhalla facility, the Fund has an interest in two dual-zone wells that
can produce from the Halfway and Doe Creek zones. The wells are currently
completed and both are on production from the Doe Creek zone to the adjacent
sweet gas facility. The sour Halfway zone was flow tested with a net
deliverability of 1.6 MMcf/day and will be flow lined to a third party sour
gas facility in the second quarter. An additional Halfway zone well is
planned on 100% acreage offsetting these two wells that could bring additional
production of 900 mcf/day net to the Fund.
EnerMark anticipates that 1999 will be another year of significant
development drilling activity in the Deep Basin area of northwest Alberta and
northeast British Columbia. The Deep Basin area is the Fund's largest natural
gas production base and currently produces approximately 12 MMcf/day of
natural gas and in excess of 400 bbls/day of natural gas liquids. The Fund has
working interests averaging approximately 8% in this area which covers over
300,000 acres of land. It is anticipated that the Fund will participate in up
to 40 development wells during 1999 as Canadian Hunter, the key operator in
this area, carries out its 1999 drilling programs. Deep Basin natural gas
wells are typically multi-zone in nature and typically have very high reserve
life indices.
In central Alberta, the Fund has two natural gas projects at Cherhill and
Golden Spike that are scheduled to come on production in the second and third
quarters. At Cherhill, EnerMark is currently finalizing plans to place on
production the natural gas from the Banff and Nordegg zones in Cherhill Unit
No.1. The majority of the infrastructure and facilities required to produce
this gas are already in place and it is expected that the gas will come on
stream in the second quarter. EnerMark anticipates that this pool will
produce 1.2 MMcf/day net to the Fund. At Golden Spike, the Fund completed and
tested a well in the Wabamun natural gas zone which it plans to tie in by
installing a short, lateral line to connect it to an existing gathering
system. We anticipate production of 1.4 MMcf/day which will be processed at a
non-operated gas plant currently under construction with a scheduled
completion date of July, 1999.
At Soars in eastern Alberta, the Fund has initiated plans to drill up to
three natural gas development wells and tie in two existing wells that will
bring approximately 0.9 MMcf/day net of natural gas on stream. The majority
of this activity will be completed during the first quarter with the gas
scheduled to come on stream in the second quarter of 1999.
In addition to its focus on natural gas, EnerMark will continue to
develop crude oil properties where economics demonstrate attractive returns.
The Fund recently achieved significant success in the Little Horse area of
Alberta with the conversion of a conventional pump jack to a high volume
submersible pump on an operated well. Gross oil production from the well
increased from 190 bbls/day to over 650 bbls/day which, on a net basis,
represents an increase of 225 bbls/day to the Fund. As a result of this
success, three additional wells in the pool have been identified for
installation of high volume lift pumps.
The Fund currently has the potential to add in excess of 2,400 barrels of
oil per day from existing project areas including Giltedge, Heward, Gift,
Chauvin and the newly acquired Medicine Hat Glauconite ''C'' area. These
activities will focus mainly on infill drilling of both vertical and
horizontal wells. However, at the present time, these projects are deferred
pending an improvement in the outlook for crude oil prices.
In addition to these development activities, EnerMark continues to pursue
acquisition opportunities as they arise. Since its inception in 1996,
EnerMark has successfully replaced all of its oil and natural production in
each year of operation at net costs below industry averages. EnerMark has also
increased its reserve life index since inception by over 2 full years.
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