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Penn West Exploration Announces Its Financial Results For The Second Quarter Ended June 30, 2013


In the first half of 2013, we completed a selective drilling program in the Cardium focusing on program capital efficiencies and advancement of slick water fracture stimulation techniques. In the Alder Flats area, drilling and completion costs in the first half of 2013 improved by more than 30 percent from 2012. Based upon these results and extensive study by our teams, we are confident that comparable savings can be repeated in the Willesden Green and Lodgepole areas of the Cardium. The Cardium represents an opportunity to create repeatable and sustainable value creative investment programs and we will be reallocating $40 million of capital to the play in the second half of 2013. As a result of this shift, we anticipate drilling 14 additional wells. We expect that a continuous, even flow drilling approach will allow us to further improve our performance in the future.


The results of our drilling program in early 2013 remain encouraging and we have achieved significant improvements in well performance and cost. Drilling cost and cycle times of our program are competitive with other industry players. Our completion costs in the Viking trend higher than most of our competitors due to our use of nitrogen in our completion technique, however, first year well productivity is more than 25 percent higher than those of our competitors, more than justifying the additional cost. We believe further cost improvements are possible with pad drilling, continued refinement of our completion techniques and continuous improvement in our drilling performance. Based upon our results to date in the first half of 2013, we will reallocate $47 million to this opportunity in the second half with the expectation of drilling and completing 32 new wells. In addition, we are evaluating down spacing in the core of the play for 2014 drilling and are pursuing the implementation of waterflood schemes to increase the recoveries and value from this play.


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