Canadian Overseas Petroleum Limited (LSE:COPL, CSE:XOP, OTC:VELXD) told investors that net oil sales averaged 1,077 barrels per day for the quarter ended September 30, up from 796 bpd in the preceding three-month period, as operations continue to perform ahead of expectations.
The success, driven by acquired assets in Wyoming, was somewhat offset by higher butane prices - which impedes production-boosts from gas injection and in the period from late August to late October saw reduced injection volumes (from 10mmcf per day to a low of 4mmcf/d).
“Our Wyoming assets continue to perform well beyond our initial expectations,” said chief executive Arthur Millholland. “Unfortunately, unexpected tight supplies of NGL's in the North American markets impacted our Miscible Flood injection plan in September and October. These tight supplies also caused the price of Butane to reach seasonal historic highs during this period.
“Fortunately, we have approximately 1,000,000 gallons/month of Butane purchases hedged at $0.91/gallon for 2021, relative to current spot prices of $1.61/gallon. Our Butane hedge for 2022 on similar monthly volumes drops to $0.76/gallon.
“As we expect the North American NGL market to remain tight through the winter heating season, our hedging program will have a very positive impact on the operating results of the Company for the balance of the year and for 2022."
Petroleum sales amounted to US$5.2mln, and, the operating netback was marked at US$26.70 per barrel.
The company noted that operating netback was lower in the latest quarter and said the change was mainly due to increased workover activity on the assets during the quarter.