(MENAFN- ProactiveInvestors) () a Canadian oil and gas producer said it has cut its planned capital spending for this year by 72 percent to weather the drop in crude-oil prices.
Capital spending for 2015 has been cut to C$25 million from C$90 million the Calgary Alberta-based company said in a statement late yesterday.
It said the reduced capital spending will generate average production for the year of between 4600 and 5000 barrels of oil equivalent per day.
Rock said its 2015 business plan is directed at activities that confirm proof of concept capture new opportunities and preserve our existing inventory.
“This disciplined approach is targeted to maintain a financially strong organization with a long term view to value creation” the company said.
No further capital is planned to be spent on development drilling until commodity prices improve Rock said.
Shares jumped 9.2 percent to C$2.74 at 2:29 p.m. in Toronto paring losses in the past year to 28 percent.
Assuming WTI averages $55/bbl for the year the WTI - WCS differential averages $15/bbl and the exchange rate averages 1.25 CDN/US$ the company would generate cash flow of approximately C$35 million or C$0.86/share.
At current forward strip pricing WTI ~$50/bbl the company would generate cash flow of approximately C$18 million or C$0.45/share.
“2015 is proving to be a challenging year for our industry as we manage a significant reduction in commodity prices” the company said. “We will be conservative and prudent with our capital spending and will remain flexible to react to changing oil prices.”
For the fourth quarter the company drilled a total of 27 (27.0 net) wells including 16 (16.0 net) Onward Viking Horizontal wells 8 (8.0 net) Mantario wells 1 (1.0 net) exploration well and 2 (2.0 net) dry and abandoned wells for an average success rate of 93 percent.
For the full year of 2014 the company drilled a total of 75 (75.0 net) wells including 39 (39.0 net) Onward Viking Horizontal wells 21 (21.0 net) Mantario wells 7 (7.0 net) Mannville wells 2 (2.0 net) exploration wells and 6 (6.0 net) dry and abandoned wells for an average success rate of 92 percent.
Production during the fourth quarter averaged approximately 5350 boepd and for the full year production is expected to average approximately 5000 boepd.
Mantario production in the fourth quarter averaged over 3500 boepd. Onward Viking production during the fourth quarter was over 900 boepd from 47 of the 53 wells drilled into the play. Currently the company is producing over 5350 boepd including over 1200 bopd of light oil from the Viking at Onward.
During the fourth quarter the company also said it made “significant progress” in the completion of the battery and injection facilities at the Mantario EOR project and shot a 33 section 3D seismic program over our lands in the Onward area.
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