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Laricina Energy Ltd. (“Laricina” or the “Company”) advises stakeholders that it has commenced the suspension and mothball of the Saleski pilot (the “Pilot”) as previously announced, and expects the completion of all activities in October 2015. Laricina’s focus is on a safe and efficient suspension ensuring that the integrity and value of its facility, wells and infrastructure is properly maintained and protected to effect a restart of the equipment in the future. Laricina completed a similar suspension and mothball of its Germain Commercial Demonstration Project in March 2015.
The decision to suspend operations at the Pilot was driven by Laricina’s need to conserve capital while under creditor protection pursuant to the Companies’ Creditors Arrangement Act (Canada) (“CCAA”) and in light of the deteriorating commodity price and economic environment.
Since 2006 Laricina has been advancing Saleski, which is the world’s first carbonate project utilizing thermal horizontal well recovery processes to produce bitumen from Alberta’s Grosmont Formation. The purpose of the Pilot was to allow Laricina to better understand the geological framework and well technology necessary for commercial-scale, long-term oil recovery from the Grosmont.
Since initiating first bitumen production in April 2011, cumulative gross bitumen production has been in excess of 600,000 barrels providing sufficient volumes to illustrate Laricina’s improved technical understanding and commercial viability of the reservoir. Although there are further learnings to obtain to continue the advancement of the Grosmont the current economic conditions and the Company’s lack of liquidity do not warrant sustaining ongoing production, and the next steps toward commercial development will require significant additional capital to carryout.
Interest in the Grosmont lies in the fact it is estimated by the Alberta Energy Regulator to contain approximately 406 billion barrels of bitumen and is the second largest bitumen-bearing formation in Alberta. In the Grosmont Formation at Saleski Laricina’s net working interest probable undeveloped reserves were 100 million barrels of bitumen and the Company’s contingent resources (best estimate) were 1,491 million barrels of bitumen as determined by Laricina’s independent reservoir engineers as at December 31, 2014.
The decision to suspend operations at the end of August was made cooperatively with our joint operations partner.
Future phases at Saleski have also been put on hold until further notice.
Moving forward Laricina will maintain a presence in the community and continue to operate the Chip Lakes road and provide regular monitoring of the Saleski and Germain properties to ensure the integrity of these valuable assets remain intact.
About Laricina Energy Ltd.
Laricina is a non-public, Calgary based, responsible energy company that will contribute supply to the growing demand for crude oil through in situ oil sands development. Laricina’s goal is to create value by developing Canada’s oil sands using innovative in situ technologies. The Company has a diverse portfolio of oil sands assets at varied stages of development. Our current focus is on the Company’s two core projects – Saleski and Germain. Laricina’s asset base, holds 0.5 billion barrels of probable reserves, 3.9 billion barrels of contingent resources (best estimate) and 0.2 billion barrels of prospective resources (best estimate) as determined by Laricina’s independent reservoir engineers as at December 31, 2014 for Germain Grand Rapids, Germain Winterburn, Saleski Grosmont, Burnt Lakes, Conn Creek, Poplar Creek and Portage properties, and as at December 31, 2013 for Thornbury, Thornbury West, House River, Germain Wabiskaw and Boiler Rapids properties. These assets include oilsands resources in the familiar McMurray Formation, and the developing Grand Rapids, and Grosmont and Winterburn carbonate plays, all of which offer significant production potential.
This information release contains certain “forward-looking statements” within the meaning of such statements under applicable securities law including but not limited to potential results of a restructuring process and enhancement of shareholder value, disclosure intentions with respect to the strategic alternatives process, capital repayment process or Settlement Transaction, and timing of final regulatory approval from the Alberta Energy Regulator and Alberta Environment. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “estimate”, “intend”, “believe”, “anticipate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on Laricina’s experience and current beliefs as well as assumptions made by, and information currently available to, Laricina, and are subject to a variety of risks and uncertainties including, but not limited to, those associated with resource definition, unanticipated costs and expenses, regulatory approvals, fluctuating oil and gas prices, and the ability to access sufficient capital to finance future acquisitions and development. Laricina’s resources at Saleski and Burnt Lakes are contained in the Grosmont Formation, and a portion of Germain’s resources are contained in the Winterburn Formation, each a carbonate reservoir. Some of the Company’s contingent resources in the carbonates that are analogous to the Saleski pilot are based on established technologies that have been demonstrated to be commercially viable specifically for the subject reservoirs, and some are based on technology under development that require further development and piloting to confirm the commercial viability of applying these technologies to carbonate reservoirs. Resource volumes based on technology under development have a higher risk than volumes based on established technology. Although the Company believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this information release are not exhaustive and readers are not to place undue reliance on forward-looking statements. Laricina disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this message, except as required under applicable securities legislation. The forward-looking statements are expressly qualified by these cautionary statements.
For further information please visit www.laricinaenergy.com or contact:
Marla Van Gelder
Vice President Corporate Development
Laricina Energy Ltd.
East Tower, 5th Ave Place
800, 425 1st Street SW
Calgary, AB. T2P 3L8