Mannheim. As of today, Cub Creek Energy begins drilling from the Knight pad, which is directly adjacent to the Olander pad to the west. Up to 12 horizontal wells with 2.25 miles horizontal length are planned. The wells are expected to begin production in the fourth quarter of 2021.
Due to the difficult situation in the U.S. oil market in recent months and the associated low drilling activity, Cub Creek will probably be able to complete the Knight wells at or below the level of the costs of the Olander wells, despite the greater horizontal length. The Olander wells cost close to USD 5.0 million per well. The total investment thus amounts to up to USD 60 million. Cub Creek’s working interest in the wells is around 90%. Financing will come from high existing cash flows from existing production, existing funds in the Group and a revolving credit line at Cub Creek. The positive development of oil prices in recent weeks has moved the WTI futures curve upwards significantly, allowing to hedge prices above USD 50 into October 2022. As a result, initial hedges will be executed over the course of the drilling program and related production expected to commence in Q4 2021.
Wells from the Olander pad have been producing again since early January after being shut-in for much of last year due to low prices. In January, the 11 wells produced a gross daily average of about 2,250 barrels of oil (BO). By the end of the month, production had already reached nearly 4,000 BO. For February, Cub Creek expects daily rates to continue to increase.
Mannheim, 5 February 2021
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