Coelacanth has embarked on an exciting drilling project at the 5-19 Pad in Two Rivers East, kicking off with the first well on September 1st. This comprehensive program includes drilling and completing three Lower Montney wells, finalizing one previously drilled Upper Montney well, and drilling a Bluesky disposal well, all at an estimated cost of around $36 million. The four pad wells are set to be completed by late October 2024.
The previous success of the three 5-19 Lower Montney wells, with a combined rate of 4,014 boe/d (54% light oil), serves as a strong foundation for this new initiative. The upcoming program will further enhance production once the Two Rivers East facility is set up and operational by April 2025. Additionally, the management is optimistic about exploring the potential of the Upper Montney zone in the area, leveraging its proven productivity in the broader region.
Strategic Benefits of the Program:
- Accelerating company growth
- Expanding drilling inventory by proving the Upper Montney’s commercial viability
- Mitigating risks in processing and transportation commitments
- Ensuring a smooth start-up of the new facility by pre-completing wells
- Enhancing financial and operational flexibility in the 2025 capital program
- Establishing production certainty for future decisions on third-party processing and facility expansion
Moreover, Coelacanth has obtained all necessary approvals for the construction of a new battery facility at Two Rivers East. This Facility will facilitate gas compression/dehydration, oil treating, water handling, as well as gathering and transport lines connecting the 5-19 Pad to a mid-stream gathering line. Construction is already underway, with the facility expected to be operational by April 2025.
Bank Credit Facility and Financial Update:
- Coelacanth secured $52 million in revolving bank credit facilities, supported by reserves at Two Rivers West and a $45 million Letter of Credit from a third party.
- An additional commitment of approximately $22 million has been secured from a Mid-Stream company for a pipeline connecting Coelacanth facilities.
- With over $60 million in cash and no debt as of Q2 2024, Coelacanth anticipates a net debt of around $40 million post the drilling program and facility operation.
- The company’s production is projected to stabilize at over 6,000 boe/d until further drilling in the summer of 2025.
Share Purchase Warrants:
- Coelacanth extended the expiry date of 33.3 million share purchase warrants to June 30, 2025, with a strike price of $1.05 per share.
- Proceeds from the warrant exercise, if any, will be utilized for additional pad drilling at Two Rivers East in the summer of 2025.
Coelacanth’s progressive initiatives and strategic planning underscore its commitment to growth, operational excellence, and financial stability. The company’s forward-thinking approach and focus on innovation position it for long-term success in the oil and gas industry.
