Pengrowth Energy Corp (NYSE:PGH) released an update on its Lindbergh SAGD project before market opened on Tuesday. Lindbergh production exceeds design capacity. Company announced that production at its Lindbergh commercial SAGD project has outperformed the design capacity of 13,000 BOE per day. The Lindbergh SAGD project is a key component of Pengrowth’s growth strategy with the potential to increase oil and liquids production by up to 80 percent and 2010 year-end reserves by 61 percent over the next four years. The Lindbergh property, located in the Cold Lake area, is 100 percent owned and operated by Pengrowth. At December 31, 2010, the Lindbergh lease had Best Estimate Contingent Resources of 193.4 million barrels of bitumen in the Lloydminster formation. This 11 degrees API oil has favorable viscosity characteristics and is in a clean, continuous, high permeability reservoir that is expected to provide Pengrowth with the potential to develop a 30,000 barrel of oil per day (bopd) commercial project of low cost, low decline, stable oil production, with a 25 year reserve life.
The Lindbergh SAGD project is being developed by a team of experienced individuals, led by Mr. Steve De Maio, Vice President In-Situ Oil Development and Operations. Mr. De Maio and the members of his team at Pengrowth have a wealth of oil sands experience with team members having worked on over 20 prior SAGD developments. Mr. De Maio himself has successfully led two previous projects through to commerciality, the most recent being the $375 million, 10,000 bopd, Algar SAGD project in northeastern Alberta.
“Successfully injecting first steam at our pilot project at Lindbergh is a significant and exciting milestone for Pengrowth” said Mr. De Maio. “Production from the pilot is expected to increase throughout 2012 to approximately 1,000 bopd by year-end and peaking at 1,200 bopd later in 2013. A successful proof-of-concept pilot will provide Pengrowth with the certainty needed to develop an initial 12,500 bopd commercial project.”
Production from the pilot has not been included in Pengrowth’s 2012 guidance estimate, however $59 million of our 2012 capital budget has been earmarked towards further developing the Lindbergh project, prior to commercial production. It is anticipated that, with success, volumes will begin to be included in production and revenue numbers in 2013. When factoring in production volumes from the Lindbergh pilot, Pengrowth’s 2012 exit rate production target would be approximately 79,000 barrels of oil equivalent per day (boepd), a four percent increase from Pengrowth’s 2011 exit rate.