Bengal Energy Ltd. is pleased to provide an update on ongoing operational matters.
Water Injection Pilot - The Cuisinier pilot project is scheduled to commence active water injection in late January 2021. This program is designed to begin increasing pressure in the pool and thereby increase the expected oil recovery in both productivity and reserves. As injected volumes ramp up the project is expected to benefit from decreased water disposal fees.
Farmin Activity - The location for the previously announced Santos farmin well has been finalized with drilling expected in calendar H2 of 2021. The well, which has no cost to Bengal through drilling, is targeting liquids-rich natural gas from the Permian Toolachee and Patchawara formations. Access to production infrastructure is available a short distance away to the southeast.
Development and Exploration - Continued low commodity pricing resulted in no new development or exploration drilling during the 2020 calendar year. The new pool discovery made at the Cuisinier 29 well continued to produce at forecast rates and averaged approximately 80 bbls/d (net 24 bbls/d) during the period. As disclosed in Bengal's MD&A for the period ending September 30 2020, the Corporation received regulatory approval for a special amendment to the initial work program on ATP 934. As a condition of the approval of the special amendment, the Corporation agreed to relinquish an additional 17% of the acreage subject to the permit in addition to the 33% mandatory relinquishment for a total of 50% (240 sub-blocks) of the acreage at the end of the first term on the permit. The acreage subject to the 50% relinquishment was determined by Bengal as being the least prospective land from a technical perspective and with the most challenging surface access conditions. In return, the Corporation was granted a reduction in the total commitment from CAD$12.3 million to $1.2 million and does not expect to make any additional investments prior to the approval of a second term on the ATP. The Company is currently working with the Government of Queensland on amending the commitment requirements and is expecting a resolution by the end of February 2021.
Production Volumes - The Company's share of total production in calendar Q4 2020 was 19,423 bbls, which is a 25% decline from the 25,758 bbls produced in calendar Q4 2019. Production in calendar fourth quarter of 2020 averaged 211 bbls/d compared to 280 bbls/d produced in the same period in the prior calendar year. Normal production declines, reduced capital spending and conversion of the C24 well from a producer to a water injection well all contributed to the production decline.
Pricing - Brent crude oil pricing improved from an average of US$43.37/bbl in calendar Q3 2020 to an average of US$45.24/bbl in calendar Q4 2020. Average US Brent pricing year to date in 2021 has been $54.98/bbl.
Westpac credit facility - The current outstanding balance on the Westpac credit facility is US$12.4MM. Cash on hand is CAD$1MM. The credit facility maturity date is unchanged at February 28, 2021. The Company continues to work towards securing a refinancing and/or recapitalization transaction to address the maturity of the credit facility and to fund ongoing operations and development activities.
