Trafalgar Energy produced an average 1,035 boe per day during Q1 2009, up 7% from Q4 2008. The increase is due to the addition of the company’s House Mountain, Alberta light oil well in November 2008 and the low decline rate of the company’s base production.
The company has significant upside in its existing asset base. At Cypress British Columbia, drilling operations were completed for the B-65-C farmout well in April 2009. This Montney/Doig directional well is currently scheduled to be completed with a multistage frac operation late in Q2. Additional activity by the operator is being evaluated with a final decision anticipated in Q4. The Cypress farmout provides Trafalgar Energy and its shareholders exposure to a material natural gas resource within an existing infrastructure with significant production potential.
At House Mountain, the company’s land position has expanded to 1,600 net acres on which the company has identified up to 10 light oil drilling locations. New drilling at House Mountain is planned to resume, contingent on cash flow and commodity prices, late this year. At Mackay/Saleski, Trafalgar Energy has an inventory of 10 natural gas locations defined and ready to drill along with the large bitumen resource controlled on company lands.
For the last six months, Trafalgar Energy has focused its efforts on developing oil resource opportunities. To date, the company has identified three such projects. The company has acquired initial land positions at 100% working interest on two of these projects. Trafalgar Energy has selectively posted additional Crown land for potential purchase this summer. Land prices have fallen significantly over the past year and Trafalgar Energy believes now is the time to build strategic land positions in expectation of an economic rebound in 2010.
On April 29, 2009 Trafalgar Energy announced the establishment of a new $18 million credit facility which provides the company with $5.3 million of credit availability. Trafalgar Energy is planning minimal drilling activity in the next few months to maintain the company’s financial position. As at the date hereof, the company estimates remaining flow through obligations of about $1.5 million. The company has the financial flexibility and projects to satisfy the company’s flow-through commitment by year end.
Merger and acquisitions opportunities continue to be identified, reviewed and evaluated. The energy business is cyclical and the management and directors of the company are focused on positioning the company’s shareholders for the next upturn.
