Quattro Exploration and Production Ltd. (TSXV: QXP.V) received approval for a $50 million capital budget that includes a three-year drilling program, the company said June 30.

The capital budget will take effect in the third quarter of 2014, the company said. The budget’s “Phase 1” portion will support operated lands in western Canada, Quattro noted.

"The approval of this budget by our board of directors is an endorsement of the Quattro team's work and technical understanding of the potential within the company's diverse land base." said Leonard Van Betuw, president and CEO.

He noted that Quattro is licensing the first 24 net wells of a 55-net well drilling program. The wells are scheduled to be drilled in the next year, he said, noting that other work on additional wells is ongoing.

The company’s exit target for Phase 1 this year is 2,500 barrels of oil equivalent per day (boe/d), and its exit target for June 30, 2015 is up to 3,500 boe/d, Quattro said. Phase 1 should cost $18,000/bbl of oil and $7,200/boe/d of natural gas, Quattro added.

A total budget of $35 million for 2015-2016 is divided, with $20 million allocated to western Canada and $15 million in the company’s Guatemala operations, Quattro said. Cash on hand, as well as cash flow from operations, will fund the budget, the company noted.

Quattro based its budget and projections on $4.25 per thousand cubic feet of natural gas and $80/bbl for Western Select oil, the company said.

Additionally, Quattro’s term loan facility was increased by the Business Development Bank of Canada, the company said. An $8 million term loan replaced the $5.125 million term loan, the company added. The additional amount paid off a capital lease and a $2.35 million balance for working capital, Quattro noted.

Calgary, Alberta-based Quattro Exploration and Production Ltd. explores and develops oil and natural gas in western Canada.