FIELD ACTIVITIES / Blue Range update
Blue Range Resources Corporation Announces Update of
Recent Operating Results and Activities
CALGARY, Oct. 8 /CNW/ - Mr. J. Gordon Ironside, President and CEO, Blue
Range Resource Corporation (''Blue Range'') is pleased to provide an update on
the Company's activities for the six months ended September 30, 1998.
1. Drilling Update
To date, Blue Range has participated in the drilling of 21 wells at an
average working interest of 70%, resulting in 3 oil wells (3 net), 12 gas
wells (7.5 net) and 6 dry holes (4.25 net) for an overall success rate of 71%.
Results have been very positive in a number of areas resulting in increases in
reserves, net asset value per share and future production. Notable successes
were achieved at Beg/Highway BC, Fireweed BC, Virginia Hills, Alberta, and
Pine Creek, Alberta.
At Beg/Highway, BC three 100% working interest Halfway gas wells have
been drilled. The first well was completed and production tested at 1.8
MMcf/d and will be on stream by November 1, 1998. The second well encountered
near virgin pressures in the Halfway zone and tested in excess of 5 MMcf/d on
completion. This well will also be tied in by November 1, 1998 with
production estimates of 4 MMcf/d. A reserve assignment in the order of 15 Bcf
is contemplated for this well. Blue Range purchased 283 hectares of lands
directly offsetting this well at the September 30, 1998 Crown land sale. A
minimum of three development wells are planned to delineate this discovery. A
third well was cased for Halfway gas and will be completed shortly.
In the Berkley Joint Venture program at Fireweed, BC two wells have been
drilled (37.5% WI) resulting in one gas well and one dry hole. The first well
was drilled horizontally into a new Baldonnel gas reservoir and tested at flow
rates up to 6 MMcf/d. This well is scheduled to be tied in by November 1,
1998. Two development wells are planned to offset this gas discovery. A
further 5 wells on separate prospects are being considered for drilling prior
to March 31, 1999. Blue Range continues to identify new opportunities in this
area and has a number of natural gas prospects.
At Virginia Hills, Alberta the Company has drilled a total of 5 wells
(90% WI) which resulted in 2 oil wells, 2 gas wells, and a triple zone (2 oil
& 1 gas) well. Incremental oil production of 300 bbl/d is now on stream and
incremental gas of 5 MMcf/d is expected by January 1, 1999. Six additional
wells are planned in this area prior to March 31, 1999.
At Pine Creek, the Company participated in a very successful Wabamun gas
well, which is currently producing at approximately 7.5 MMcf/d (2.6 net). Two
additional wells (1D&A, 1Cased) have been drilled with two follow up locations
planned before March 31, 1999. Blue Range expects that this program will
result in a further 3 MMcf/d net being on stream by March 31, 1999.
Overall, a further 28 wells will be drilled by the Company prior to March
31, 1999. Blue Range continues to focus its activities on liquids-rich
natural gas in its three core areas of northeast BC/ Clear Hills,
Valleyview/W5, and Central Alberta and currently has a number of gas prospects
in inventory.
2. Reserves & Finding Costs
Based on internal estimates for wells drilled and completed to date,
proven reserves of 7.3 million BOE (of which 2.4 million BOE were booked as
proven undeveloped as of March 31, 1998) have been added for a net increase of
4.9 million BOE. Capital expenditures to date (before deducting proceeds of
the sale of a 52% interest in the Clear Hills Gas Plant, but allowing for
facilities and tie-in costs) are estimated at $30 million, resulting in proven
finding and development costs of $6.25/BOE.
3. Production Increases
The Company's drilling and recompletion program has added new future
production of 28 MMcf/d of natural gas and 840 bbl/d of liquids production, of
which 2/3 will be brought on stream by November 1, 1998 with the remaining 1/3
by January, 1999.
4. Net Asset Value Per Share
Management believes that with the addition of 7.3 million BOE of proven
reserves, the sale of a 52% interest in the Clear Hills Gas Plant (at a value
in excess of its March 31, 1998 value) and the advent of significantly higher
gas prices, net asset value per share has increased. Management's current
estimate is that net asset value is in excess of $8.00 per share. The
completion of the Company's winter drilling program along with facilitating
new production will continue to add value for shareholders.
5. Higher Natural Gas Prices
Natural gas prices continue to be strong in advance of the winter heating
season. Blue Range has fixed the price on 18 MMcf/d of BC gas production at
$2.85/Mcf for the period November 1, 1998 to March 31, 1999. Further hedges
are being contemplated for 5 MMcf/d of Alberta volumes for the winter at
similar pricing levels. Blue Range is reviewing options for extending these
hedges by locking in prices for April 1 - Oct 31, 1999 at prices in the
$2.50/Mcf range. Based on prices received to date, the current outlook for
aggregator prices and hedging activities, the Company anticipates that it will
achieve an average sales price of $2.00/Mcf for the year ended March 31, 1999.
6. The Blue Range 1998 - 2000 Joint Venture Proposal
Blue Range has engaged CIBC Wood Gundy Securities Inc. to market this
Joint Venture Proposal and to provide financial advice regarding the
transaction. The proposal has been actively marketed and a number of parties
have expressed an interest in this opportunity. The Joint Venture will allow
the Company to expand the capital budget it manages by approximately $25
million per year with the successful Joint Venture participant joining in on
approximately one third of the Company's drilling program over the next three
years. An option to acquire $25 to $30 million of producing properties is
also part of the Joint Venture proposal. In addition to a substantial
inventory of drill ready prospects the Company has several high risk/high
reward ideas which it will pursue with the Joint Venture Participant. An
agreement in principal is expected by December 1, 1998.
Blue Range is a natural gas exploration, development and production
company based in Calgary, Alberta. The Company concentrates its activities on
liquid-rich natural gas prospects in Central Alberta, Northwest Alberta and
Northeast British Columbia. Blue Range's common shares are listed for trading
on The Toronto Stock Exchange and The Alberta Stock Exchange under the symbol
BBR.A.
THIS INFORMATION HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE TORONTO
STOCK EXCHANGE.
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For further information: J. Gordon Ironside, President and CEO, or
Douglas O. McNichol, COO, (403) 231-6361 or visit our website at
www.bluerange.com
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