{"id":1655,"date":"2018-03-22T11:49:07","date_gmt":"2018-03-22T15:49:07","guid":{"rendered":"https:\/\/crownpointenergy.com\/?p=1655"},"modified":"2018-03-22T11:49:07","modified_gmt":"2018-03-22T15:49:07","slug":"mar-21-2018","status":"publish","type":"post","link":"https:\/\/crownpointenergy.com\/?p=1655","title":{"rendered":"Mar-21-2018"},"content":{"rendered":"

Crown Point Announces Operating and Financial Results\u00a0<\/strong>for the Three Months and Year Ended December 31, 2017<\/strong><\/a><\/p>\n

\u00a0<\/strong>TSX-V:\u00a0 CWV: Crown Point Energy Inc. (\u201cCrown Point\u201d, <\/strong>the \u201cCompany\u201d <\/strong>or “we<\/strong>“)<\/strong> today announced its operating and financial results for the three months and year ended December 31, 2017.<\/p>\n

Copies of the Company\u2019s audited consolidated financial statements and Management\u2019s Discussion and Analysis (\u201cMD&A<\/strong>\u201d) filings for the year ended December 31, 2017 are being filed with Canadian securities regulatory authorities and will be made available under the Company\u2019s profile at www.sedar.com<\/a> and on the Company\u2019s website at www.crownpointenergy.com<\/a>. All dollar figures are expressed in United States dollars (“USD<\/strong>“) unless otherwise stated.<\/p>\n

In the following discussion, the three months and year ended December 31, 2017 may be referred to as \u201cQ4 2017\u201d and \u201cYE 2017\u201d or \u201c2017\u201d, respectively, the comparative three months and year ended December 31, 2016 may be referred to as \u201cQ4 2016\u201d and \u201cYE 2016\u201d or \u201c2016\u201d, respectively, and the previous three month period ended September 30, 2017 may be referred to as \u201cQ3 2017\u201d.<\/p>\n

OPERATIONAL UPDATE<\/strong><\/p>\n

Tierra del Fuego Concession (“TDF”)<\/strong><\/p>\n

Rio Cullen and La Angostura<\/u> Concessions<\/u><\/p>\n

Two wells (RC x-1002 in Rio Cullen and SM x-1001 in La Angostura) were drilled and cased between January and April 2017.\u00a0 SM x-1001 (La Angostura concession, net working interest of 25.78%) reached a final depth of 2,126 m and was cased as a potential Tob\u00edfera and Springhill formation oil well.\u00a0\u00a0 SM x-1001 began a long-term production test from the upper Tobifera formation on October 10 and between October 10 and December 31, 2017, the well produced a total of 18,268 m3 (114,905 bbls) of 35 API gravity oil (gross), at an average rate of 220 m3 (1,384 bbls) per day of oil (gross), through a series of choke sizes ranging between 8 and 14 mm.\u00a0 No water was reported produced during this test period.\u00a0 During December 2017, the well was shut-in for three days to record bottom hole pressures and over the remainder of the month produced a total of 7,920 m3 (49,820 bbls) of 35 API gravity oil (gross) at an average flow rate of 283 m3 (1,780 bbls) per day (net 73 m3 (460 bbls) per day) through a 14 mm choke at a flowing well head pressure of 31.6 kg\/cm2 (465 psi).\u00a0 During this same period, the well produced a total of 466,228 m3 (16,464 mcf) of associated natural gas (gross), at an average rate of 16,651 m3 (588 mcf) of associated natural gas per day (gross), which is little changed since the well was placed on the long-term production test. Produced oil is trucked to the Company\u2019s TDF facilities for storage and sale.\u00a0 Natural gas production is currently being flared while the Company and its partners evaluate conservation options. The Company and its joint venture partners plan to drill an appraisal well on the San Martin structure during the first half of 2018 and have budgeted for one additional well, contingent on the results of the appraisal well.<\/p>\n

As previously reported, RC x-1002 (Rio Cullen concession, net working interest of 25.78%) was drilled to a final depth of 1,740 m and cased as a potential Springhill formation gas well during March and April 2017. Completion operations on RC x-1002 were conducted during May and June 2017 and the well was subsequently tied into company-owned Rio Cullen gas gathering facilities and placed on production on July 19, 2017. The well is currently suspended due to high water cut.<\/p>\n

The Company has fulfilled the Rio Cullen and La Angostura concession expenditure commitments and exercised the option to extend the term of each concession to August 2026 by making the minimum cash payment to the Province of TDF. For each concession, the cash payment is a minimum of $32,500 to a maximum of $1.29 million (net to the Company’s interest) and the investment commitment is a minimum of $0.46 million to a maximum of $9.28 million (net to the Company’s interest).\u00a0 The investment commitment for exploration and development work will be determined on a sliding scale based on a proved plus probable reserves range discovered during the initial exploration period of between zero and greater than 18 million BOE.\u00a0 The total cash payment and investment commitment have not yet been determined by the Province of TDF and the Company has not yet received formal approval of the concession extensions.<\/p>\n

Las Violetas Concession<\/u><\/p>\n

The Company has slated a cased well, LFE-1004, from the Company’s 2014-2015 drilling program for completion and testing in March and April 2018. The Company and its joint venture partners plan to drill an exploration well (LR x-1001) in the second quarter of 2018 to test the eastern extension to the Rio Chico gas pool.\u00a0 The Company has identified an additional number of older producing and non-producing gas wells on the Las Violetas concession as candidates for intervention and possible fracture stimulation to restore and\/or improve production. Two wells identified for intervention will be re-entered during the second quarter of 2018.<\/p>\n

Prospect identification and evaluation to develop additional exploitation, step-out and appraisal locations for inclusion in the 2018 capital program on the Las Violetas concession is ongoing.<\/p>\n

Cerro de Los Leones Concession <\/strong><\/p>\n

The Company has a 100% working interest in the 100,907 acre area covered by the Cerro de Los Leones (\u201cCLL<\/strong>\u201d) Concession Permit, which is located in the northern portion of the Neuqu\u00e9n Basin in the Province of Mendoza, Argentina.<\/p>\n

In March 2017, the Mendoza provincial government formally agreed to extend the deadline to acquire 234km2<\/sup> of 3-D seismic from May 21, 2017 until January 22, 2018 and informally agreed to extend the commitment to drill one exploration well for an unspecified period following the acquisition of seismic.\u00a0 In October 2017, the Company requested a further extension of the deadline to acquire the 3-D seismic until April 2018 when a seismic crew becomes available, and to defer drilling of the commitment exploration well until December 2018.\u00a0 The Company is working to obtain all necessary environmental and surface access approvals to begin seismic recording in April 2018.\u00a0 In March 2018, the Company received formal approval from the government for both the extension and deferral to January 22, 2019.<\/p>\n

The Company is actively seeking a partner in the CLL concession to share future capital costs and provide capital cost recovery opportunities on existing and previous capital projects.<\/p>\n

OUTLOOK<\/strong><\/p>\n

Crown Point estimates a total of $12.8 million of capital expenditures in fiscal 2018 comprised of $5.4 million of expenditures on the TDF concessions and $7.4 million of expenditures on the CLL concession (which will be reduced if the Company obtains a partner at CLL). Crown Point expects to meet these obligations, along with its other anticipated expenses, using the net proceeds of the October 2017 rights offering, funds flow from operations, cash proceeds from the New Gas Incentive Program and proceeds from the sale of BONAR 2020 bonds and additional debt and\/or equity financings and potential joint venture arrangements.<\/p>\n

The Company anticipates the following activities to occur during the first half of 2018 at a total estimated cost of $6.9 million:<\/p>\n