CALGARY, Feb. 19 /CNW/ - ("Sabretooth" or the "Company") (TSX: "SAB") is
pleased to provide an operational update and additional details on its future
exploration and development activities.
Red Creek Horizontal, B.C.
Sabretooth and HFG Holdings Inc. ("HFG") have finished completing their
first horizontal, exploration Montney well at Red Creek in February 2009. The
well continues to recover gas and condensate and has recovered 59% of its
completion fluid. The well is currently producing at 670 mcf/d with flow
pressures of 1,000 kPa tubing and 3,650 kPa casing. Stabilized rates are below
expectations, however, Sabretooth and HFG are currently equipping the well for
extended cleanup and further flow test to better understand well performance
once additional load fluid is recovered. The well is owned by HFG Holdings
Inc. which is owned 71% by Sabretooth Energy.
Exploration and Development Update
Sabretooth will continue to focus its exploration and development efforts
on its core land holdings which will provide opportunities for growth for the
balance of 2009 and into 2010. Sabretooth and HFG plan to spud a vertical
Montney exploration well in Sinclair this weekend. A second Sinclair Montney
vertical exploration well is expected to spud in Q2. Sabretooth and HFG also
plan a horizontal development Montney well, offsetting the recent successful
horizontal Montney well in the Gordondale area, following spring breakup.
Additional Hedge
The Company locked in a price on an additional 6,000 GJ/d of natural gas
at $7.85 / GJ from April 1, 2009 to March 31, 2010. This represents
approximately half of the Company's current production and guarantees cash
flow for capital projects and improving working capital position. The Company
also has two hedges in place totaling 9,000 GJ/d for approximately $7.06 / GJ
which expire on March 31, 2009.
Asset Backed Commercial Paper
The Pan-Canadian Investors Committee for Third-Party Structured Asset
Backed Commercial Paper announced the completion of the restructuring on
January 21, 2009. Due to the successful restructuring, $18 million of
Sabretooth's debt is converted from current debt to non-current for up to
seven years matching the maturity of the Asset Backed Commercial Paper
("ABCP"). The cost of servicing this loan is expected to offset the interest
to be received on the ABCP going forward. Additionally, Sabretooth received
its first of two interest payments from its ABCP since the restructuring was
completed in January 2009. The interest received was $858,000 representing the
amount owed from acquisition to July 31, 2008. The second accrued interest
payment of approximately $400,000 is expected by the end of the first quarter
of 2009.
About Sabretooth Energy
Sabretooth Energy Ltd.
