CALGARY, ALBERTA--(CCNMatthews - Sept. 16, 2004) - Flowing Energy Corporation (TSX:FLO) is pleased to announce that it has commissioned its 100% owned Wildmere North gas processing facility and gathering system and production commenced the second week of September. The capacity of the gas facility is 3 mmcf per day and can be expanded to 6 mmcf per day with an upgrade to the compression. During the third quarter, Flowing completed an extensive 15 square mile 3-D seismic program over its Wildmere North lands and has identified 17 (16.5 net) "drill ready" Colony gas prospects. All of the Colony gas prospects are located less than two miles from Flowing's new gas gathering system. Based upon Flowing's review of Colony gas pools in the area, several gas wells have cumulative gas production in excess of one BCF in the play trend. The first of four Colony gas locations planned for September is currently drilling and an additional four locations are planned for the fourth quarter.
Flowing also announces that it has signed a farm-in agreement at Wildmere covering three sections (1,920 net acres) of undrilled land. These farm-in lands are contiguous to Flowing's Wildmere oil property and fall within the mapped area of our existing Lloydminster heavy oil pool. At January 1, 2004, Flowing controlled six sections of land over this pool. Effective January 1, 2004 proved plus probable recoverable oil reserves of 11.2 million barrels were assigned to Flowing's Wildmere property by Gilbert Laustsen Jung Associates Ltd., Flowing's independent reserve evaluators. Based upon Flowing's existing Wildmere oil pool development approximately 80 oil locations exist on the farm-in lands. Flowing expects that the three farm-in sections hold similar potential to that on Flowing's original six sections. By drilling one earning well per section, Flowing will earn a 100% working interest in the section subject to a non-convertible royalty. Flowing has commenced a 3-D seismic program over the farm-in lands with the first earning well to be drilled in November. In addition to the Lloydminster oil drilling program, the lands hold the potential for Colony gas reserves.
During the summer, Flowing also completed a total of 22 square miles of 3-D seismic programs over its 100% working interest lands in two other core areas - Monitor and Paradise Valley. These seismic programs are currently being reviewed and several oil and gas locations are expected to be identified. In the Monitor area Flowing has received regulatory approval to develop Viking gas prospects at four wells per section, resulting in 20 additional gas locations. Flowing has also received approval to develop the Sparky oil pool at Monitor on 40-acre spacing. This results in an additional 16 Sparky oil locations.
In September, Flowing increased its revolving credit facility with the Royal Bank of Canada by $2.0 million to $37.0 million. The revolving credit facility is presently drawn down by $32.9 million. In conjunction with its $3.0 million lease credit facility, Flowing's total debt facility is $40.0 million.
In September Flowing also completed a 500 barrel per day oil hedge (a total of 182,500 barrels) for the calendar year 2005 at a West Texas Intermediate (WTI) benchmark price of CDN $52.70 per barrel. This hedge represents approximately 20 percent of the Corporation's current oil production. Flowing enters into oil price hedges for the purpose of protecting future cash flow and earnings from the volatility of crude oil prices. The remaining oil production and all of Flowing's natural gas production remains unhedged for 2005.
Robert Bowman, President and CEO of Flowing, stated "Tremendous progress has been made on our business plan to become a balanced producer with gas volumes now approaching 35% of the portfolio. We have a significant number of oil, gas and coal bed methane prospects, and 100% working interest gas processing facilities in both the Wildmere and Monitor core areas. These efforts allow Flowing to gain momentum on gas exploration and maintain a two-year inventory of both oil and gas prospects. Flowing plans to maintain its significant growth rate through the drill bit. The Company is committed to meet our 2004 Guidance update which forecasts 2004 average production of 3,500 - 3,800 barrels of oil equivalent per day."
Certain information disclosed in this press release, including management's assessment of Flowing's future plans and operations, contains forward looking statements that involve substantial known and unknown risks and uncertainties. These forward looking statements are subject to numerous risks and uncertainties, several of which are beyond Flowing's control. These include the impact of economic and industry conditions, changes in laws and regulations, volatility of oil and gas prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, stock market volatility and ability to access capital from external sources. Flowing's actual results and performance could differ materially from those expressed in, or implied by, these forward looking statements and accordingly, no assurance can be given that any events anticipated by the forward looking statements will transpire or occur, or if any of them do, what benefits Flowing can derive therefrom.
FOR FURTHER INFORMATION PLEASE CONTACT:
Flowing Energy Corporation Robert Bowman President & CEO (403) 777-4282 (403) 543-9638 (FAX) or Flowing Energy Corporation Robert Kraft Chief Financial Officer (403) 777-4282 (403) 543-9638 (FAX) Email: info@flowingonline.com Website: Email: www.flowingonline.com
