CALGARY, June 16 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company")(TSX: WAV.A and WAV.B) plans to accelerate development of its numerous lightoil opportunities due to drilling success and low debt levels. Breaker willnow invest an additional $35 million in 2008, focused on new drilling at itsthree light oil growth properties, its deep Devonian exploration play inBritish Columbia, and a new horizontal multifrac gas resource play at Provost.
Breaker's 2008 capital budget forecast is now $105 million, increasedfrom $70 million. Of the $35 million increase, $25 million is allocated toprojects that add production in 2008, with the balance devoted to longer termprojects. This will result in an increased forecast exit rate of 6,900 boe/d,up from the previous estimate of 6,200 boe/d. Breaker now estimates its 2008full year average production will be 6,000 boe/d. Cash flow is stronger as aresult of higher commodity prices with forecast 2008 annual cash flowincreasing to $98 million from $66 million. Breaker's bank line is currently$95 million and management forecasts a conservative level of leverage atyear-end with net debt of $58 million and a net debt to annualized fourthquarter 2008 cash flow ratio of 0.5. Based on fourth quarter forecastproduction and strip pricing as of mid-June 2008, annualized fourth quartercash flow could exceed $150 million.
Irricana
Breaker has realized and maintained significant light oil productionincreases from drilling in the large original oil-in-place pool at Irricana.Initial rates from new drills have been steadily increasing with time andexperience with horizontal drilling and multi-frac completions, particularlyin areas proximal to historical poor producers. The most recent drills broughtonstream just prior to break-up exceeded rates of 700 boe/d, and are stillproducing at levels comparable to historical best producers before Breakerinitiated the multi-frac completions program. The property has maintainedproduction in excess of 2,800 boe/d for the past three months, an indicationof the strength and stability of the ten new wells.
As a result of the significant success of the drilling program, Breakeris increasing the Irricana 2008 budget by $11.4 million to a total of$45 million. Of this extra capital, $7.5 million will allow Breaker to drillan additional two horizontal light oil wells and one additional exploratoryPekisko gas well. The remaining $2.0 million will be used to expand theproduction infrastructure. The main oil gathering line to the central batterywill be looped to alleviate rising pipeline pressures caused by increasedproduction volumes, thus lowering the back pressure on the existing producersto increase total field production. A waterflood injection pilot will also beinitiated to test the viability of waterflooding, potentially increasing theoil recovery substantially.
In total, Breaker plans to drill 6 more light oil horizontals, 2exploratory Pekisko wells, and conduct one Mannville gas recompletion duringthe balance of 2008. This program will capitalize on the success of themulti-frac horizontal oil wells, and set up potential gas development programsto take advantage of stronger gas prices. In addition to the expanded drillingprogram, the investment in company owned and operated infrastructure willensure that the full production potential of the new drills and existingproducers can be realized.
Girouxville
At Girouxville, Breaker is doubling the 2008 budget to a total of$13.6 million, allowing the Company to capitalize on its large inventory ofdeep light oil exploratory prospects that qualify for the $1 million maximumroyalty holiday. Four gross (2 net) additional wells with multi-zone targetssupported by joint proprietary 3D seismic will be drilled in the thirdquarter. Breaker has recently demonstrated a 100 percent success rate onsimilar targets, and should enjoy initial netbacks near $130/bbl based oncurrent oil prices. Additional operated wells at varying working interests andincreased seismic acquisition are also planned.
East Prairie
At East Prairie, performance of the wells drilled during the winterprogram has remained strong.
