NAL’s third quarter reflected a return to field related activity after an extremely wet and extended spring break-up in many of our core operating areas. Drilling activity commenced in June in Alberta, and in July in Saskatchewan. Capital spending directed toward drilling, completion and tie-in activities totaled $72 million and resulted in 47 (24.6 net) wells drilled.
Third quarter average production of 28,752 boe per day was approximately seven percent (1,994 boe) higher than second quarter, 2011 volumes. This increase is a result of Saskatchewan volumes coming back on-stream and the impact of the second quarter completion and tie-in of volumes from the 2011 Cardium and Mississippian light oil drilling programs. Full year 2011 production guidance remains unchanged in the 28,500 boe per day range while the 2011 exit rate is forecast to be in the 29,000 boe per day range.
NAL spent $9.8 million acquiring land during the quarter, focused on acreage in the Sawn Lake area of northern Alberta. NAL now holds an average 50 percent interest with a major operator in the area in over 20 sections of land prospective for the Slave Point carbonate. Production in the area is light sweet oil (approximately 40° API) with offsetting recent horizontal development resulting in initial production rates of up to 450 boe per day. NAL anticipates commencing drilling in this play during the first quarter of 2012.
Financially, NAL has over $247 million of credit capacity available from bank facilities of $550 million and remains well hedged for the remainder of 2011. Approximately 50 percent of net forecasted crude oil volumes are hedged with a combination of swaps at an average price of US$88.10 per bbl and collared contracts averaging in the $90 by $100.50 per bbl range. For 2012, the Corporation currently has contracts in place on full year average crude volumes of 4,250 bbls per day at an average floor price above US$96.00 per bbl.
NAL remains opportunity rich with a deep oil drilling inventory in both Alberta and southern Saskatchewan. We remain positive about the assets, opportunities and future performance of the Corporation and are committed to continuing to deliver for our shareholders.
I would like to thank NAL’s staff in our field operations and in the Calgary office for their continued dedication and efforts through this period of high activity. As a result of their commitment, NAL remains well positioned to complete 2011 on a positive note.
On behalf of the Executive and the Board, I thank you for your ongoing support of NAL Energy Corporation.
Andrew B. Wiswell
President & Chief Executive Officer