(Stock Symbol "CLT" - TSX) March 8 2012
Calgary, Alberta
Celtic Exploration Ltd. ("Celtic" or the "Company") released
its financial results for the year ended December 31,
2011, earlier today. The Company has followed up with this
press release, providing an operations update.
Celtic is pleased to provide an update on activities at
Resthaven. To date, the Company has drilled 20 horizontal
Montney wells over a fairway that extends more than 70
kilometres. Celtic has built a facility located at 02-10-
060-01W6 (the "Resthaven facility") including compression and
dehydration equipment with a capacity of 55.0
MMCF per day of raw natural gas production. The Company has
tied-in nine horizontal wells to date and is currently
producing approximately 30.0 MMCF per day of raw natural gas
through the Resthaven facility. The gas is shipped through a
12-inch pipeline from the Resthaven facility to the Keyera
Simonette Gas Plant where the gas is processed and liquids
are extracted. The Simonette Gas Plant is currently operating
at -30° C and the operator is working to bring the
configuration to -35° C, increasing the liquids recovery
ratio. In addition, the operator is currently working on an
expansion with deep-cut capability that will further enhance
liquids recovery.
The completion for deep-cut capability at the Simonette Gas
Plant is expected to be December 2013. In
addition, Celtic has built a water injection facility which
is tied into the Resthaven facility, to further reduce
production expenses.
Celtic recently completed the pipeline extension north-west
to Jayar and has brought the horizontal well located at
04-34-061-03W6 (100% WI) on production. A second horizontal
well at Jayar located at 01-15-061-03W6 (100% WI) has been
drilled and is currently being completed. A third well
located at 02-26-061-03W6 (100% WI) is currently
drilling.
Celtic recently completed a horizontal well in the Montney
formation at Resthaven located at 02-30-060-02W6 (100% WI).
The well was drilled to a measured depth of 5,177 metres and
was completed with a 16-stage foam fracture technique. After
304 hours of frac clean-up and flow, at the end of the test,
the well was producing natural gas at a rate of 10.1 MMCF per
day and field condensate at 118 barrels per day, at a flowing
wellhead pressure of 5,578 kPa (809 psi). This well is now on
production and additional liquids will be recovered from the
gas at the gas plant.
The Company currently has six additional horizontal wells at
Resthaven that have been drilled and are awaiting tie-in. The
majority of these wells are expected to be brought on
production in April and May 2012.
Celtic has continued to be active drilling the Duvernay shale
play at Kaybob. The horizontal well located at 13-
36-060-20W5 (33.3% WI) was completed and brought on-stream in
February. The well will be produced at high back pressure,
similar to the methodology used in the Eagle Ford shale play
in Texas, USA. The horizontal well located at 13-22-062-21W5
(50% WI) was completed using a plug and perf technique with
40 perf clusters fractured in 10 stages. During clean-up, the
well flowed at rates of up to 6.8 MMCF per day up 7" casing
after which the well was shut-in to run tubing. The well was
then tested at various gas rates between 6.0 to 7.7
MMCF per day at flowing tubing pressures of 10 to 15 mPa
(1,450 to 2,174 psig). At the end of the 11 day flow period,
in addition to the natural gas production, the well was
producing field condensate at a rate of 658 barrels per day
(109 barrels per MMCF of raw gas). This well is expected to
be put on production this summer. Another
horizontal well located at 04-11-060-19W5 (33.3% WI) has been
drilled and is expected to be completed prior to spring
break-up. Two additional horizontal wells will be spud prior
to break-up.
Celtic was informed by SemCAMS ULC ("SemCAMS"), the operator
of the Kaybob KA Gas Plant ("KA"), that due to certain
mechanical issues, KA was shut down on February
27th, 2012. Initially, SemCAMS expected to have
resolved the operational issues and put the plant back online
within a few days. However, SemCAMS has informed the Company
that the anticipated start-up date is now expected to be on
March 15th, 2012. As a result, Celtic's
production processed at KA of approximately 7,700 BOE (78%
gas) per day will be shut-in for 18 days.
At Grande Cache, the Company shut-in production at the Copton
Gas Plant as a result of a field site accident that resulted
in a fatality. Approximately 1,600 BOE (100% gas) per day was
shut-in for approximately four weeks.
Celtic currently produces approximately 4,000 BOE (77% gas)
at the Kaybob K3 Gas Plant ("K3"). K3 is expected to be
shut-in for four weeks during May and June, as SemCAMS, the
operator, will be conducting planned turnaround maintenance
operations. These turnaround operations occur every four to
five years.
Celtic's 2012 Guidance, as reported on March 8, 2012,
reflects the impact of the aforementioned gas plant
outages.
In 2012, Celtic recently completed the acquisition of an
additional 11.04% interest in the Kaybob South Unit #2,
giving the Company an interest of 88.96% in the Unit and
related facilities, including the gas compression facility
located at 15-07-060-18W5. The Energy Resources Conservation
Board has granted Celtic approval to
construct a gas processing facility capable of handling 150
MMCF per day of raw gas at 15-07-60-18W5 which is centered
between the KA and K3 Gas Plants. Celtic is currently
preparing documentation to put construction
of a gas plant at this location out for re-bids. The Company
will incur the majority of the expenditures to build this
plant in 2013 and is currently reviewing alternatives to
enhance liquids recovery. Celtic will be able to process
the majority of its gas that is currently being processed at
KA and K3 at this new facility. In addition, Celtic will be
able to process new production from Kaybob where it is
actively drilling wells targeting the Duvernay shale
formation.
During February 2012, Celtic entered into an agreement to sell 5,488 net acres of land with no associated production for proceeds of $8.5 million ($1,549 per acre). This transaction is expected to close on April 2, 2012. The Company is currently negotiating with certain third parties to dispose additional properties with production in its non-core areas.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS
This document contains expectations, beliefs, plans, goals,
objectives, assumptions, information and statements about
future events, conditions, results of operations or
performance that constitute "forward-looking
information" or "forward-looking statements" (collectively,
"forward-looking statements") under applicable securities
laws. Undue reliance should not be placed on forward-looking
statements. Forward-looking statements are based on current
expectations, estimates and projections that involve a number
of risks and uncertainties, which could cause actual results
to differ materially from those anticipated by the Company
and described in the forward-looking statements. We caution
that the foregoing list of risks and uncertainties is not
exhaustive. Events or circumstances could cause actual dates
to differ materially from those estimated or
projected and expressed in, or implied by, these
forward-looking statements. The forward-looking statements
contained in this document are made as of the date hereof and
the Company does not intend, and does not assume any
obligation, to update or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise unless expressly required by applicable
securities laws. Readers are cautioned that the foregoing
test results are not necessarily indicative of long-term
performance.
All dollar amounts are referenced in Canadian dollars, except
when noted otherwise. Where amounts are expressed on a barrel
of oil equivalent ("BOE") basis, natural gas volumes have
been converted to oil equivalence at six thousand cubic feet
per barrel and sulphur volumes have been converted to oil
equivalence at 0.6 long tons per barrel. The term BOE may be
misleading, particularly if used in isolation. A BOE
conversion ratio of six thousand cubic feet per barrel is
based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead. References to oil in
this discussion include crude oil and natural gas liquids
("NGLs"). NGLs include condensate, pentane, propane, butane
and ethane. References to gas in this discussion include
natural gas and sulphur.
Working interest is abbreviated as "WI". Million cubic feet
is abbreviated as "MMCF". Thousand cubic feet is abbreviated
as "MCF". Barrels are abbreviated as "bbls". Giga joules are
abbreviated as "GJ". Kilopascals is abbreviated as "kPa" and
pounds per square inch is abbreviated as "psi".
For further information, please contact:
Sadiq H. Lalani, Vice President, Finance and Chief Financial Officer (403) 215-5310. Or visit our website site at www.celticex.com.