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Vol. 18, No. 33 Week of August 18, 2013
Providing coverage of Bakken oil and gas

Lightstream finds ‘fantastic economics’ in Saskatchewan Bakken

Calgary-based Lightstream Resources has pumped an extra C$25 million into its well optimization budget in Saskatchewan’s Bakken, while deferring some drilling activity in its Cardium business unit.

Chief Executive Officer John Wright told a second-quarter conference call that the shift towards the “very profitable” Bakken program will allow Lightstream (formerly PetroBakken) to take advantage of “fantastic economics and the potential for application on an even broader scale in the years to come.”

The capital infusion will see the company spend up to C$725 million this year and result in 111 net wells, up 18 from the previous target.

Lightstream said the spending changes include an increase in facilities spending of about C$25 million as a result of cost overruns and scope changes, as well as higher-than-anticipated drilling and completion costs on exploration wells drilled in emerging play areas “where innovative techniques are being applied to delineate and de-risk new plays.”

Wright said the adjusted capital guidance will “reflect some additional spending on our facilities, some expensive test wells and new play concepts that we hope will bear fruit into the future.”

Lightstream said it is holding its average production guidance for 2013, but lowering its exit rate by about 4 percent to 47,000-50,000 barrels of oil equivalent per day, reflecting the deferred wells, most of which were scheduled to start producing in the fourth quarter.

Chief Financial Officer Peter Scott said the net result from the capital budget changes and an improved outlook for net realized pricing should increase the flow of funds from operations by C$40 million to C$60 million to about C$720 million.

Lightstream reported that output for the second quarter rose to 46,046 boe per day from 38,715 boe per day a year earlier, ahead of the company’s forecast because of its maturing production base.

With first half production at the higher end of the company’s guidance, it expects a slight decline in the third quarter since the timing of summer drilling will mean new wells are brought onstream later in the period, but production should resume its growth curve in the final quarter.

Lightstream reported a second-quarter net loss of C$50.57 million compared with C$24.59 million a year earlier, while the first half loss increased to C$48.96 million from C$9.73 million.

The company tied the increased losses to a larger foreign exchange loss, higher depletion and depreciation associated with higher production and a lower unrealized gain on risk management contracts.

During the second quarter the company drilled seven wells and brought 20 on production, with another 14 wells waiting to be completed or to start production.

The use of pad drilling within the Cardium business unit allowed Lightstream to continue completion activities through the spring melt, resulting in 13 wells being completed and 17 being brought on production.

Field activity in the Bakken unit resumed in late June after spring break-up and the company said it is expanding its field optimization program due to the success of its first-half investments.

The company said its enhanced oil recovery plans continue to advance and natural gas injection projects are expected to grow in 2014.

—Gary Park



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