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Kiwetinohk Provides Operations Update, Adds Solar Project to Green Energy Portfolio and Increases Bank Credit Facility

15 Jun 2022

Kiwetinohk Energy Corp. (TSX: KEC) announced record corporate upstream production rates, the acquisition of a new early stage 150 MW solar development project with a 150 MW expansion opportunity located in Central Alberta and an increase of its credit facility. 

"Kiwetinohk continues to execute on its business plan, safely and reliably increasing upstream production and increasing our inventory of high-quality, no-carbon renewable power projects as we build our position as an energy transition and ESG leader," said CEO Pat Carlson.

Upstream update 

May production averaged ~16,500 boe/d, reaching ~18,500 boe/d during the first two weeks of June.  Base performance from existing wells continues to exceed expectations with two new Duvernay wells brought on-stream mid-May, increasing Kiwetinohk's year-to-date new well total to six (4 Duvernay, 2 Montney).

The longest running well, a Duvernay producer at the 9-7 pad, achieved an IP90 (first 90-day production average) of ~1,500 boe/d, including ~4.0 MMcf/d of natural gas and ~800 bbl/d of condensate and is currently producing ~2,000 boe/d with ~6.0 MMcf/d of natural gas and ~1,000 bbl/d of condensate.

"Kiwetinohk is confident in our new Duvernay and Montney wells," said CEO Pat Carlson. "The team continues to deliver with focus on filling our gas processing capacity and capturing market opportunities."

Drilling at the most recent four-well pad in Simonette continues to progress efficiently with the last well expected to be drilling in the lateral within the next few days.  Overall delivery of wells ahead of schedule has helped offset other industry-wide inflationary pressures.  These Simonette completions are expected to commence in late June.  This year's remaining development program includes spudding nine wells on three additional pads before year-end.

Green Energy update

In May, Kiwetinohk closed the acquisition of an early-stage solar development project (Solar 3 or Phoenix) in Central Alberta with a 150 MW first phase plus an optional 150 MW expansion.  Green Energy 2022 capital guidance remains unchanged at $15-$20 million.  The Solar 3 project is in Alberta Electric System Operator (AESO) Stage 2, with environmental studies and regulatory activities underway and a targeted final investment decision in Q3 2023.

Solar 3 represents a valuable addition to Kiwetinohk's diversified solar and gas-fired power portfolio, which now includes 1,950 MW of total generation capacity across six projects.  Solar 3 augments the Company's existing 700 MW solar projects in southern Alberta, providing geographic diversification, expanded development alternatives, and opportunity for more construction synergies given the closely staged solar projects.

Kiwetinohk continues to advance development, environmental studies, regulatory activities and engineering cost estimates across its Green Energy portfolio.  The Homestead Solar Project (Solar 1) recently advanced grid connection achieving AESO Stage 3 and with Alberta Utilities Commission review of the power plant and substation application underway.  Capacity on the Alberta electrical grid will be confirmed and allocated to the 400 MW Homestead Solar Project at the conclusion of AESO Stage 3.

Kiwetinohk increased the capital cost estimate for the Homestead Solar Project to $750 million, an increase of 15% from prior estimates which reflects inflation and supply chain challenges impacting the global solar industry.  Despite increased capital costs, project economics remain strong as increased industry wide capital costs are expected to result in higher structural power prices in the Alberta market going forward.  Kiwetinohk's energy transition strategy and its efficient and responsive assets position the company to benefit from increased natural gas and electricity demand, a strong price environment and market volatility.

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