Canadian
Superior to kick off Trinidad drilling in 2007
CCNMatthews
CALGARY
Petroleumworldtt.com
11 19 06
Canadian Superior Energy Inc. of Calgary, Alberta,
Canada announced todaythe grow the Corporation's
production and achieve objectives, particularly
directed towards its Trinidad and Tobago multi-well
drilling program which is expected to commence in
the 1st quarter of 2007.
In
addition, natural gas prices and oil prices have
somewhat recovered recently and we expect that trend
to continue during the balance of 2006 and into
2007. The Corporation will take full advantage of
increases in production that have been obtained
in 2006 to date and the further increases anticipated
from the Corporation's 4th quarter drilling and
completion program. In that regard average daily
production for the year to date has increased to
over 3,000 boe/d with a 3rd quarter exit rate of
approximately 3,375 boe/d. Further gains are expected
upon tie-in of several additional successful conventional
oil and gas wells, including the significant gas
discovery well announced on September 18, 2006,
as well as additional non-operated Coal Bed Methane
("CBM") wells that are expected to be
tied-in by year-end.
We
expect the next several months will be very exciting
and rewarding for Canadian Superior and our shareholders,
especially in light of our high impact exploration
drilling program commencing Offshore Trinidad, complemented
by our Offshore Nova Scotia, Canada activities and
our solid progress in Western Canada.
TRINIDAD
AND TOBAGO
As
the most industrialized country in the Caribbean,
Trinidad and Tobago's business environment has several
advantages, including a well-educated labour force,
good transportation and communication links, a strong
legal system, a well entrenched stable democratic
system of government, a soundly-regulated financial
system and a very successful and growing oil and
gas industry that accounts for approximately 50%
of total government revenue. This combined with
successful ongoing oil and gas exploration and development
makes offshore Trinidad one of the most coveted
oil and gas basins in the world today and we are
very excited about commencing drilling on our Block
5(c) (Please see Map, lower page 3) in the 1st quarter
of 2007.
Offshore
Trinidad is a "World Class" basin with
multiple large exploration and development opportunities
as evidenced by recent drilling and development
successes in the Columbus Basin, as well as having
well developed, and developing liquefied natural
gas ("LNG") facilities and capacity, and
ready access to international markets. Trinidad
is the fifth largest exporter of LNG in the world
and approximately 80% of North America's LNG is
supplied from Trinidad. Some of the largest producing
wells in the world are located offshore Trinidad
and in close proximity to our acreage (Please see
Maps, pages 2 and 3). Earlier this year British
Petroleum Trinidad and Tobago placed its Cannonball
platform on production with three wells making a
total of approximately 700 mmcf/d production. You
don't have to look very far west of Block 5(c) at
the offsetting British Gas operated Dolphin development
(producing approximately 500 mmcf/d) and the recently
commissioned Dolphin Deep development which has
two wells that have a combined capability of producing
300 mmcf/d to see the potential of Block 5(c) that
Canadian Superior intends to explore, develop and
monetize for the Corporation and our shareholders.
Our
80,041 acre offshore Block 5(c) is located about
96 kilometers (60 miles) off the east coast of the
island of Trinidad with water depths in the range
of 150 - 450m (500 - 1,500 feet). All wells in Block
5(c) will be drilled from a semi-submersible drilling
rig, with the wells being drilled in water depths
of approximately 245m (800 feet). In March 2006
the Corporation entered into a firm multi-well drilling
contract 100% on its own, at a very attractive rate,
approximately 1/2 of what is currently being paid
for comparable rigs in today's market, for the Kan
Tan IV Semi-Submersible Drilling Rig, managed by
A. P. Moller - Maersk A/S ("Maersk"),
of Copenhagen, Denmark and owned by Beijing Zhiyuan
Industries Company Limited ("Beijing Zhiyuan"),
of Beijing, China to drill two firm Company operated
exploration wells on Canadian Superior's Block 5(c)
offshore Trinidad. (Please see Kan Tan IV picture,
page 4). On November 10, 2006, Canadian Superior,
Maersk and the rig owners, Beijing Zhiyuan, agreed
to a third firm well for Canadian Superior on Block
5(c) to be drilled in direct continuation of the
two wells previously announced.
Now,
these three firm Company operated back-to-back wells,
named after famous battle and sailing ships, "Intrepid",
"Bounty" and "Victory", will
evaluate three large separate potential hydrocarbon
bearing structures that have been delineated by
extensive 3D seismic (Please see lower Map &
upper Figure, pages 3 & 5) that Canadian Superior
has evaluated, with the first well of the three
back-to-back wells to commence drilling shortly
after the Kan Tan IV has completed a scheduled refurbishment
currently underway in Brownsville, Texas. The refurbishment
is extensive, taking longer than originally expected,
and is currently scheduled for completion early
in the 1st quarter of 2007; later than planned,
but not very far away. Once the refurbishment is
complete, the drilling rig will undergo its acceptance
testing and then it will be towed to Trinidad and
then directly to Canadian Superior's first Block
5(c) well site to commence drilling. Each of these
offshore exploration wells, "Intrepid",
"Bounty" and "Victory", named
after famous battle and sailing ships, will be High
Pressure ("HP") wells and will be drilled
to a depth in excess of 5,000+ m (16,400+ feet)
and each is currently expected to take between 80
- 100 days to drill and evaluate. This three well
drilling program will take approximately 240 - 300
days to complete; with the results of the first
well known after about 80 - 100 days into the drilling
program.
To
assist Canadian Superior in going forward with its
drilling in Trinidad, the Corporation has entered
into a participation agreement with a non-competitive
industry financial partner, Challenger Energy Corp.
("Challenger"), (TSX VENTURE:CHA). Challenger
will participate on a promoted basis paying 1/3
of Canadian Superior's Block 5(c) exploration program
to obtain 25% of Canadian Superior's revenue share
of these prospects.
As
a result of the above mentioned, this has been a
very busy quarter for the direct Trinidad team and
the Corporation's staff in general, working to finalize
all the necessary details in engineering, procurement,
Health, Safety & Environmental Management, the
Kan Tan IV refurbishment program, etc. to facilitate
drilling on these exciting plays, as well as progressing
the geophysics and regulatory permitting. This has
included the ongoing procurement and purchase of
long lead tangible items (pipe, wellheads, etc.)
that are on the critical path and various related
drilling services and also the finalization of the
staffing plan for the drilling program. The Corporation
has expended significant time and effort, in addition
to significant capital, now in excess of US $25
million (rig advance payments, casing, wellheads,
etc.) preparing for this multi-well drilling program.
Of
particular additional note, in terms of geological
and geosciences activities, in the 3rd quarter,
processing of the pre-stack depth migration data
subset of the extensive British Gas Dolphin 3D seismic
data was completed to further fine tune the drilling
locations and the prognosis for each well. In addition
to the first two firm locations, "Intrepid"
and "Bounty", the team will also be drilling
on a well-defined third independent structure on
our Block 5(c) for our 3rd exploration well, "Victory",
named after Lord Nelson's famous British flagship.
The Corporation has agreed to drill this 3rd Block
5(c) exploration well, "Victory", in direct
continuation of the first two wells; whereby, all
three wells will be drilled and evaluated before
the end of the 4th quarter 2007.
Although
Block 5(c) clearly has the Corporation's primary
focus, attention and commitment of resources, in
addition, in Trinidad and Tobago, we continued to
prepare for the first phase of operations on our
Mayaro/Guayaguayare (M/G) "Tradewinds"
project, which directly offsets onshore lands to
the west being explored by a major operator (Please
see Map, upper page 3). The "Tradeswinds"
project is a joint venture with the national oil
company, the Petroleum Company of Trinidad and Tobago
Limited ("Petrotrin"), and encompasses
securing two near-shore Blocks (55,000 gross acres)
off the east coast of Trinidad, expected to be completed
in the 4th quarter 2006, where we have the potential
to establish significant oil reserves in the heart
of a known producing hydrocarbons-bearing structural
trend. On the M/G Block Land, the Corporation is
working on the design of a seismic program to evaluate
the near-shore block and is planning this program
to be shot in the near future where we intend to
drill two or more offshore wells within the next
36 months.
OUTLOOK
- 2006 and Longer Term
We
continue to build on the hard work and solid foundation
the Corporation has developed over the past several
years, and although we have recently seen volatility
in lower commodity prices, we do not view this as
a long term trend given the world's growth and its
appetite for energy. We are very excited about the
future and how well Canadian Superior is growing
shareholder value through the "drill-bit"
in Western Canada and with our offshore projects,
particularly in Trinidad and Tobago, and new projects
we are working on. Our strategic corporate objective
remains to continue to focus on high impact world
class offshore projects, combined with a strategy
of growing production and cash flow, while adding
shareholder value and continuing to grow with financial
discipline by:
-
Continuing forward expeditiously with our drilling
program Offshore Trinidad and Tobago, and, in due
course, moving forward with further drilling Offshore
Nova Scotia.
-
Maintaining high working interest operated positions
on our high impact offshore plays, focusing on maintaining
a strong balance sheet.
-
Focusing on our Drumheller core production area
in Western Canada.
-
Taking full advantage of our evolving exciting Western
Canadian Coal Bed Methane ("CBM") opportunities.
-
Continuing to build on our tremendous strengths
and opportunities with our strong team of experienced
management and personnel to focus on increasing
value to our shareholders successfully through the
"drill-bit".
We
see the next several months will be very exciting
and rewarding for Canadian Superior and our shareholders,
especially in light of our "World Class"
drilling program commencing in the 1st quarter 2007
Offshore Trinidad, complemented by Offshore Nova
Scotia and our solid prospects in Western Canada.
We appreciate your past support as shareholders
and your continued support.
CCNMatthews
- Nov. 14, 2006
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