Canada's leading light oil producer Penn West will invest C$900 million ($815 million) in 2014 on its assets in Western Canada, targeting an annual average output of 101,000-106,000 b/d of oil equivalent, CEO Dave Roberts said Friday.
Nearly 63%, or $565 million, of the planned spending will be on the three light oil plays of Cardium, Viking and Slave Point, all in Alberta, he said on a conference call to discuss the company's last quarter 2013 earnings.
Some C$270 million will be spent at Cardium for the next phase expansion of its enhanced oil recovery pilot work along with a targeted drilling of 67 net wells, Roberts said.
At Viking, the company plans to drill 104 net wells at a cost of C$150 million. And at Slave Point, Penn West intends to spend C$145 million with a focus on completing a "low-risk" development that entails drilling of 21 net wells, and an expansion of the waterflood program, he said.
Penn West owns over 600,000 acres of light oil assets in the Cardium, Viking, Spearfish, Swan Hills and Carbonates plays in Alberta. The 2014 capital expenditure comes on the back of the company aggressively pursuing a program to get a better handle on costs and "turn the corners," Roberts noted.
"Improving performance and driving costs down further is critically important for us," he said.
Last year, the company's overall operating expenses decreased C$166 million year on year, while at the same time netbacks improved 12% to C$29.69/barrel of oil equivalent, he said.
Roberts' statements come on the back of a strategic review Penn West carried out last year to boost its sagging crude oil and NGL output in Alberta.
Besides strict fiscal discipline, the review also suggested the sale of Penn West non-core assets, he said.
The company's last quarter 2013 production was 123,995 boe/d, compared with 153,931 boe/d in fourth quarter 2012, the company said Friday.
Light oil and NGL output in Q4 2013 was 64,056 b/d, followed by 14,601 b/d of heavy oil and 272,000 Mcf/d of natural gas.
Terming 2014 a year of "transition" for Penn West, Roberts said the company remains on track to sell more assets and rationalizing its portfolio of assets.
Last December, the company completed total sales valued at C$486 million, which was followed by another transaction on January 21 that fetched C$175 million, he said.
"Our long-term plan is to dispose of C$1.5 billion to C$2 billion of light oil assets in the Cordova and Peace River areas in Alberta and Saskatchewan and shale gas properties at Duvernay in British Columbia," he said.
