Mr. Ingram Gillmore reports
GEAR ENERGY LTD. ANNOUNCES OPERATIONAL UPDATE, GUIDANCE FOR 2020 AND EXTENSION OF BORROWING BASE REDETERMINATION
Gear Energy Ltd. has provided an update on current and future expected operations, and has extended the scheduled date for its semi-annual borrowing base redetermination.
With recent improvement in oil prices supporting positive economic returns, Gear has initiated a gradual production restart across the majority of the asset base. After initiating shut-ins through April, corporate production was restricted by almost 80 per cent in May with approximately 1,300 barrels of oil equivalent per day delivered to market. Current estimates are for June production to be approximately 3,700 boe per day, July to be approximately 5,000 boe per day and August to be approximately 6,000 boe per day. With minimal capital expenditures currently forecast for the rest of 2020, production is expected to decline slightly through to December, providing an annual average of 5,200 to 5,300 boe per day (57 per cent heavy oil, 28 per cent light and medium oil, 3 per cent natural gas liquids, and 12 per cent gas).
2020 annual guidance is as follows.
Annual production: 5,200 to 5,300 boe per day
Heavy oil weighting: 57 per cent
Light/medium oil and NGL weighting: 31 per cent
Royalties: 11 per cent
Operating plus transportation costs: $17 to $18 per boe
General and administrative costs: $2.60 per boe
Interest costs: $2.05 per boe
Capital and abandonment expenditures: $13-million
Borrowing base redetermination extension
Gear's lenders have agreed to extend the redetermination of the semi-annual borrowing base to July 10, 2020, to allow for additional time to finalize negotiations and to obtain required approvals. Borrowings will remain capped at $75-million during this period.
We seek Safe Harbor.
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