Kallisto provided the following update on its Crossfield and Pembina, Alberta operations.
The Company's first Viking horizontal oil well, located at 01-29-028-01 W5, finished drilling on September 2, 2010. The wellbore encountered 1,100 meters of Viking sand with oil shows. The well operator recommended a completion procedure which included energizing the frac with a controlled rate flow back which is different than what other operators in the area have used. The well was stimulated on September 18, 2010, using 11 multi-stage fracs. The well was placed on production on October 7, 2010, and for mechanical reasons the well has produced only 11 days. Rates for the last two days have been approximately 30 bbls/d of completion fluid and formation oil. The rates are substantially less than anticipated, have not yet stabilized and appear to be less than the initial Viking formation oil rates from offsetting vertical wells. The Company is continuing to evaluate the well with its technical staff and advisors to determine why the multi-stage frac stimulation appears not to have been effective and whether the well was severely damaged. Kallisto is discussing future completion procedures, reservoir analysis and equipment options with its joint venture operator.
Robyn Lore, CEO of Kallisto said that "Based on results of recent wells drilled on the Crossfield Viking trend and Kallisto's successful Cardium experience at Pembina, Kallisto continues to believe in the success of the Crossfield Viking Play."
Kallisto's second Viking horizontal oil well, located at 08-20-028-01 W5, was has been drilled and cased and is awaiting completion. This well was drilled in half the time of the 01-29 well and under budget. The 8-20 well will be completed with up to 18 multi-stage fracture stimulations. Completion is expected in November.
Kallisto has a 50% working interest in both wells and expects to participate in the drilling of an additional 9 - 12 wells on its Crossfield lands in the next six to twelve months.
The Company's sixth Cardium horizontal oil well, located at 12-33-047-03 W5, has been completed and is being equipped with production to start early November. The well was completed using 16 multi-stage fracture stimulations. Production results will be released once stabilized rates have been established. Kallisto has a 30% interest in its Pembina lands and expects to participate in the drilling of an additional 5 wells on these lands in the next six to twelve months.
Kallisto has accepted an offer from a private company to purchase its Gift, Alberta property for cash consideration of $3.7 million. The closing of the transaction is expected to take place on or about November 15, 2010 following the completion of due diligence. Kallisto's production from this property is approximately 55 bbls/day.
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