Lone Pine Resources (LPR) Reports Increasing Borrowing Base by C$75M; Issues Operational, Management Update
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Lone Pine Resources Inc. (NYSE: LPR) today announced an increase to the Company's borrowing base available under its existing syndicated credit facility, an operational update from the third quarter of 2011, certain Board of Director changes and an executive appointment.
Lone Pine's lenders have completed the semi-annual review of Lone Pine's borrowing base available under its five-year, syndicated credit facility. Effective September 21, 2011, the borrowing base has been increased from the previously available CDN$350 million to CDN$425 million. The increase in the borrowing base reflects the successful drilling program the Company has completed in the first half of 2011 and the continued advancement of its Evi light oil play. The next scheduled borrowing base review will be completed in the spring of 2012.
perational Update
Peace River Arch - Evi Light Oil Play
To date in the third quarter of 2011, Lone Pine has drilled 12 gross (12 net) horizontal wells at Evi with a 100% success rate, and completed and brought on stream 7 gross (7 net) horizontal wells. The Company remains encouraged by the initial production rates of the new wells brought on stream as the average initial peak production rates continue to exceed 300 Bbls/d. Lone Pine is currently completing 6 wells, and plans to run two rigs to drill an additional 13 gross (13 net) horizontal wells prior to year-end 2011.
In the third quarter of 2011, Lone Pine increased its Evi land position by 32% to 65,440 gross and 57,222 net acres through purchases at Crown land sales. The acquired acreage represents a significant addition to Lone Pine's existing contiguous land holdings in the Evi field and will extend the Company's future light oil drilling inventory.
Deep Basin - Nikanassin Resource Play
To date in the third quarter of 2011, Lone Pine has drilled 1 gross (1 net) vertical well, completed 3 gross (2.5 net) vertical wells and brought on stream 2 gross (1.5 net) vertical wells in the Nikanassin resource play in the Narraway/Ojay area. Lone Pine continues to focus its development activities on de-risking its large land base to validate its Deep Basin Model. The average performance of these new vertical wells exceeds the program type curve, with an initial 30 day production average rate of 6.2 MMcf/d.
Pointed Mountain - Liard Basin Shale Play
Lone Pine has initiated its first high impact exploratory test well in the Liard Basin at Pointed Mountain in the Northwest Territories in the third quarter of 2011. The Company expects to see preliminary results from this vertical re-entry of an existing well bore in the fourth quarter of 2011.
one Pine expects third quarter of 2011 average net sales volumes to range from 97 - 100 MMcfe/d (105 - 108 MMcfe/d working interest), which represents a 4% increase over levels achieved in the second quarter of 2011 and includes an increase in net liquids weighting from 19% in the second quarter of 2011 to 22% in the third quarter. Lone Pine remains on track to meet its previously announced second half of 2011 net sales volumes guidance of 98 - 102 MMcfe/d (108 - 112 MMcfe/d working interest). Based on field estimates, Lone Pine estimates its current net sales volumes to be 100 MMcfe/d (109 MMcfe/d working interest).
Based on successful Crown land sale purchases at Evi in the third quarter of 2011, Lone Pine has increased its previously announced 2011 exploration and development capital budget to US$237- US$247 million, which includes the spending of US$130 - US$140 million in the second half of 2011.
Spin-Off from Forest Oil Corporation
Forest Oil Corporation ("Forest") (NYSE: FST) has previously announced that its Board of Directors has declared a special stock dividend to its shareholders of 70,000,000 shares of common stock of Lone Pine currently owned by Forest, representing approximately 82% of the outstanding shares of Lone Pine common stock (the "Distribution"). The Distribution will be made on September 30, 2011 to all Forest shareholders of record as of the close of business on September 16, 2011. Forest has announced a final distribution ratio for the special stock dividend of 0.61248511 of a share of Lone Pine common stock for every share of Forest common stock held.
The transition services agreement between Forest and Lone Pine, pursuant to which Forest provides certain administrative services to Lone Pine, will remain in effect until December 1, 2011.
Board of Director Changes
Lone Pine announces that on September 20, 2011, H. Craig Clark, President & Chief Executive Officer of Forest and a director of Lone Pine since February 2011, tendered his resignation from the Board of Directors of Lone Pine (the "Board"), effective on September 30, 2011, contingent on completion of the Distribution.
Lone Pine is pleased to announce the following appointments to its Board, effective on September 30, 2011, contingent on completion of the Distribution.
Donald McKenzie will join the Board and will serve as the Chairman of the Compensation Committee and as a member of the Nominating & Governance Committee. Mr. McKenzie served as President and Chief Executive Officer of M-I SWACO, a subsidiary of Smith International ("Smith"), from January 2006 to December 2009 and as advisor to the Chief Executive Officer, President and Chief Operating Officer of Smith from January 2010 to September 2010. Prior to 2006, Mr. McKenzie served as regional Vice-President, Europe & Africa, for Smith and held other senior positions with the Smith group of companies. From March 2008 to September 2010, Mr. McKenzie served on the board of directors of CE Franklin Ltd. Mr. McKenzie is a member of the Society of Petroleum Engineers, the International Association of Drilling Contractors, and the Institute of Corporate Directors.
Rob Wonnacott will join the Board and will serve as a member of the Audit and Reserves Committee. Mr. Wonnacott served as the Chief Financial Officer of Grizzly Oil Sands ULC, a privately owned bitumen development company, from January 2011 to June 2011. Mr. Wonnacott held various senior positions at National Bank Financial Inc. from 2001 to 2009, including Managing Director and Vice Chairman of Corporate and Investment Banking, and was responsible for the investment banking practice in the oil and gas and utilities sectors. From 1991 to 2001, Mr. Wonnacott held various investment banking positions, including Managing Direcctor, with BMO Nesbitt Burns Inc. Mr. Wonnacott received a Bachelor of Science Degree in Civil Engineering from Queens University and a Master of Business Administration Degree from the University of Western Ontario.
Executive Appointment
Lone Pine is pleased to announce the appointment of Charles R. Kraus as Vice President, General Counsel and Corporate Secretary. Mr. Kraus is a U.S. and Canadian qualified lawyer and joins Lone Pine after 10 years in private practice in the United States and Canada. Mr. Kraus was most recently with Stikeman Elliott LLP as a member of the firm's securities group, where he focused on cross border and international capital markets transactions, mergers and acquisitions, joint ventures and corporate governance. Mr. Kraus holds a Juris Doctorate from Hamline University School of Law (magna cum laude) and is a member of the bars of Alberta, Washington and Minnesota.
Lone Pine's lenders have completed the semi-annual review of Lone Pine's borrowing base available under its five-year, syndicated credit facility. Effective September 21, 2011, the borrowing base has been increased from the previously available CDN$350 million to CDN$425 million. The increase in the borrowing base reflects the successful drilling program the Company has completed in the first half of 2011 and the continued advancement of its Evi light oil play. The next scheduled borrowing base review will be completed in the spring of 2012.
perational Update
Peace River Arch - Evi Light Oil Play
To date in the third quarter of 2011, Lone Pine has drilled 12 gross (12 net) horizontal wells at Evi with a 100% success rate, and completed and brought on stream 7 gross (7 net) horizontal wells. The Company remains encouraged by the initial production rates of the new wells brought on stream as the average initial peak production rates continue to exceed 300 Bbls/d. Lone Pine is currently completing 6 wells, and plans to run two rigs to drill an additional 13 gross (13 net) horizontal wells prior to year-end 2011.
In the third quarter of 2011, Lone Pine increased its Evi land position by 32% to 65,440 gross and 57,222 net acres through purchases at Crown land sales. The acquired acreage represents a significant addition to Lone Pine's existing contiguous land holdings in the Evi field and will extend the Company's future light oil drilling inventory.
Deep Basin - Nikanassin Resource Play
To date in the third quarter of 2011, Lone Pine has drilled 1 gross (1 net) vertical well, completed 3 gross (2.5 net) vertical wells and brought on stream 2 gross (1.5 net) vertical wells in the Nikanassin resource play in the Narraway/Ojay area. Lone Pine continues to focus its development activities on de-risking its large land base to validate its Deep Basin Model. The average performance of these new vertical wells exceeds the program type curve, with an initial 30 day production average rate of 6.2 MMcf/d.
Pointed Mountain - Liard Basin Shale Play
Lone Pine has initiated its first high impact exploratory test well in the Liard Basin at Pointed Mountain in the Northwest Territories in the third quarter of 2011. The Company expects to see preliminary results from this vertical re-entry of an existing well bore in the fourth quarter of 2011.
one Pine expects third quarter of 2011 average net sales volumes to range from 97 - 100 MMcfe/d (105 - 108 MMcfe/d working interest), which represents a 4% increase over levels achieved in the second quarter of 2011 and includes an increase in net liquids weighting from 19% in the second quarter of 2011 to 22% in the third quarter. Lone Pine remains on track to meet its previously announced second half of 2011 net sales volumes guidance of 98 - 102 MMcfe/d (108 - 112 MMcfe/d working interest). Based on field estimates, Lone Pine estimates its current net sales volumes to be 100 MMcfe/d (109 MMcfe/d working interest).
Based on successful Crown land sale purchases at Evi in the third quarter of 2011, Lone Pine has increased its previously announced 2011 exploration and development capital budget to US$237- US$247 million, which includes the spending of US$130 - US$140 million in the second half of 2011.
Spin-Off from Forest Oil Corporation
Forest Oil Corporation ("Forest") (NYSE: FST) has previously announced that its Board of Directors has declared a special stock dividend to its shareholders of 70,000,000 shares of common stock of Lone Pine currently owned by Forest, representing approximately 82% of the outstanding shares of Lone Pine common stock (the "Distribution"). The Distribution will be made on September 30, 2011 to all Forest shareholders of record as of the close of business on September 16, 2011. Forest has announced a final distribution ratio for the special stock dividend of 0.61248511 of a share of Lone Pine common stock for every share of Forest common stock held.
The transition services agreement between Forest and Lone Pine, pursuant to which Forest provides certain administrative services to Lone Pine, will remain in effect until December 1, 2011.
Board of Director Changes
Lone Pine announces that on September 20, 2011, H. Craig Clark, President & Chief Executive Officer of Forest and a director of Lone Pine since February 2011, tendered his resignation from the Board of Directors of Lone Pine (the "Board"), effective on September 30, 2011, contingent on completion of the Distribution.
Lone Pine is pleased to announce the following appointments to its Board, effective on September 30, 2011, contingent on completion of the Distribution.
Donald McKenzie will join the Board and will serve as the Chairman of the Compensation Committee and as a member of the Nominating & Governance Committee. Mr. McKenzie served as President and Chief Executive Officer of M-I SWACO, a subsidiary of Smith International ("Smith"), from January 2006 to December 2009 and as advisor to the Chief Executive Officer, President and Chief Operating Officer of Smith from January 2010 to September 2010. Prior to 2006, Mr. McKenzie served as regional Vice-President, Europe & Africa, for Smith and held other senior positions with the Smith group of companies. From March 2008 to September 2010, Mr. McKenzie served on the board of directors of CE Franklin Ltd. Mr. McKenzie is a member of the Society of Petroleum Engineers, the International Association of Drilling Contractors, and the Institute of Corporate Directors.
Rob Wonnacott will join the Board and will serve as a member of the Audit and Reserves Committee. Mr. Wonnacott served as the Chief Financial Officer of Grizzly Oil Sands ULC, a privately owned bitumen development company, from January 2011 to June 2011. Mr. Wonnacott held various senior positions at National Bank Financial Inc. from 2001 to 2009, including Managing Director and Vice Chairman of Corporate and Investment Banking, and was responsible for the investment banking practice in the oil and gas and utilities sectors. From 1991 to 2001, Mr. Wonnacott held various investment banking positions, including Managing Direcctor, with BMO Nesbitt Burns Inc. Mr. Wonnacott received a Bachelor of Science Degree in Civil Engineering from Queens University and a Master of Business Administration Degree from the University of Western Ontario.
Executive Appointment
Lone Pine is pleased to announce the appointment of Charles R. Kraus as Vice President, General Counsel and Corporate Secretary. Mr. Kraus is a U.S. and Canadian qualified lawyer and joins Lone Pine after 10 years in private practice in the United States and Canada. Mr. Kraus was most recently with Stikeman Elliott LLP as a member of the firm's securities group, where he focused on cross border and international capital markets transactions, mergers and acquisitions, joint ventures and corporate governance. Mr. Kraus holds a Juris Doctorate from Hamline University School of Law (magna cum laude) and is a member of the bars of Alberta, Washington and Minnesota.
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