Elkwater Resources Ltd. (TSX VENTURE:ELW) has provided an operations update and announce details of its first quarter 2015 capital budget.

During the fourth quarter of 2014, the company invested approximately $7.0 million in the drilling and development of its newly acquired properties in Drayton Valley and Killam, targeting light oil from the Cardium and Belly River zones, and medium oil from the Lloydminster zone, respectively.

Highlights from the fourth quarter of 2014 include:

  • Drayton Valley: Drilled and completed 2.0 gross (1.8 net) Cardium horizontal oil wells;
  • Killam: Drilled 3.0 gross (3.0 net) Lloydminster horizontal oil wells; and
  • Brazeau: Tied-in 1.0 gross (1.0 net) Belly River horizontal oil well.

The Brazeau Belly River horizontal oil well averaged 430 boe/d (65% oil and NGLs) in its first 30 days based on field production reports. Management intends to restrict production in order to gather additional pressure and production data, and continue to interpret the characteristics of the reservoir.

The Drayton Valley Cardium wells have undergone preliminary production testing and are scheduled to be equipped, tied in and on production in January, 2015.

In light of recent market volatility and weakening in commodity prices, Elkwater's management team and board of directors are taking a "disciplined and conservative" approach to the 2015 budget, according to a release. The board of directors has approved a capital expenditure budget for the first quarter of 2015 and intends on approving the full-year 2015 capital budget prior to the end of the first quarter.

During the first quarter of 2015, Elkwater intends on investing approximately $4.5 million on the following activities:

  • Drayton Valley: Equip and tie-in the 2.0 gross (1.8 net) Cardium horizontal oil wells that were drilled and completed in the fourth quarter of 2014; and
  • Killam: Complete, equip, and tie-in the 3.0 gross (3.0 net) Lloydminster horizontal oil wells that were drilled in the fourth quarter of 2014.

Calgary-based Elkwater will continue its pursuit of value-driven acquisitions, including consolidation of land positions within the company's existing project areas, in addition to targeting new potential opportunities in complementary shallow, light oil horizons within its Central Alberta core region. The company is highly focused on adding to its inventory of high quality drilling locations to sustain longer-term growth.