Cinch Energy has been successful in expanding its production base whereby 60% of the existing corporate production comes from British Columbia.
The company carries on concluding vertical wells to decrease the risk in the Montney horizon in its core Dawson area, situated between the Storm Parkland pool and the Arc Dawson pool. At present, Cinch Energy has an interest in 61 sections in the Dawson area including an average working interest of about 33% in 26 sections where Montney mineral rights are held. So far, Cinch Energy and its partners have concluded four vertical Montney tests between the Parkland and Dawson Montney pools. Cinch Energy is now assessing alternatives to bring its Montney gas on production.
The Dawson 11-26 well (65% working interest) was drilled and cased to the PreCambrian zone at 3841 meters. This well was initially concluded in the Wabamun with marginal results and was later vertically accomplished in the shallower Montney zone. By completing the Montney zone, Cinch Energy earned a 32.5% working interest in the section. The Montney zone was flow tested over a 3.5 day period at a stable rate of about 2mmcf/d.
The Dawson 10-15 well (26% working interest) was cased to the Kiskatinaw formation. The Kiskatinaw completion was unsuccessful and the well was then vertically concluded in the Montney zone. The natural gas rate after a five day flow period was about 600mcf/d.
Cinch Energy has concluded its annual line of credit review with its lender. The company’s line of credit has been raised from $40 million to $43 million. Existing net debt is anticipated at $36 million, which is likely to remain fairly constant through 2009 with Cinch Energy projecting capital expenditures to match 2009 anticipated cash flow. Cinch Energy’s 2009 capital budget stays at $15 million but is reliant on higher commodity prices in the latter part of the year. The capital budget is being closely monitored and will be adjusted consequently with any further movements in commodity prices.
