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Hazloc Heaters
WEC - Western Engineered Containment

Gear Energy Ltd. Provides Revised 2020 Guidance and Operational Update

CALGARY – Gear Energy Ltd. (“Gear“) (TSX: GXE) announces revisions to the 2020 budget guidance and an update on operations to date in 2020.


Given the current weakness and uncertainty in the future price of oil, Gear has chosen to immediately implement a material reduction to its planned capital program for the remainder of 2020. All future 2020 non-discretionary capital spending will be placed on hold until prices recover to more sustainable levels. Protection of the corporate balance sheet will be the top priority.

Under the planned revisions, capital investment for 2020 would be approximately $13 million, including an estimated $11 million of capital invested through the first quarter of 2020. This represents a 74 per cent reduction from the original $50 million capital budget released on December 18, 2019. Annual average production associated with this revised forecast will be approximately 6,000 boe per day, (56 per cent heavy oil, 29 per cent light and medium oil, 3 per cent NGLs and 12 per cent natural gas). In addition, multiple cost savings initiatives can be pursued through the course of the year with per unit costs, (including operating, transportation, general and administrative, and interest costs per boe) estimated to be within five per cent of the original budget despite lower production levels

Forecasted annual funds from operations are expected to be supported by substantial estimated gains on the 2020 risk management program with hedged volumes of approximately 3,200 bbl of oil per day. Utilizing current strip pricing, Gear estimates that 2020 funds from operations will exceed the $13 million capital program, enabling further reductions in outstanding net debt.

The Gear team intends to remain flexible and opportunistic with regards to this capital plan, keeping a close eye on the commodity market and being prepared to expand investments if pricing changes materially.


Through the first three months of 2020, Gear successfully drilled nine new wells.

  • Two Lindbergh Cummings multi-lateral heavy oil wells, following up on the successful first well drilled into this new area in 2018. Initial production from the wells is meeting expectations.
  • Two wells drilled into new core areas; one a multi-lateral medium oil well and the other a single leg lined heavy oil well. Both wells are on production and have successfully de-risked incremental future drilling locations.
  • Four Paradise Hill McLaren single lateral heavy oil wells, which have not yet been brought on production.
  • One Killam Lloydminster multi-stage fractured medium oil well, drilled within the waterflooded area of the pool. The well has not yet been brought on production.

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