Subsequent to the drilling of the initial discovery well, Cedar Ridge has tested seven additional Coalbed methane wells within the Slater Dome Area. All seven of the wells have provided additional proof of the presence of economic natural gas reserves associated with Coalbed methane. It appears that at least three of the seven will produce economically recoverable quantities of natural gas. One well was tested at a rate of 1.5 million cubic feet of gas per day ("MMCFGPD"). While there can be no guarantee this well will continue to flow at this level, as an example only a single well flowing 1.5 MMCFGPD will, at today's prices, generate over $2.75 million in revenue annually.
Dover and its partners have concluded that indications thus far warrant the construction of a 6-inch, eighteen-mile natural gas pipeline capable of carrying 16 MMCFGPD. We anticipate the pipeline will be constructed by a third party, at no initial cost to Dover. Construction is expected to begin no later than spring, 2004.
Dover anticipates drilling an additional well in the Slater Dome Area in the very near future. Drilling is expected to commence in late January and to be completed by mid-February. An update will be provided by the Company at that time.
The drilling program for 2004 is expected to consist of twelve additional wells in the spring and, depending upon the success of these wells, another twelve wells in the fall.
No firm assurances can be provided that the Slater Dome Area contains any commercially recoverable natural gas. In addition, substantial additional capital will be required in order to bring such oil into production, and no assurance can be provided that such capital will be available to Dover Petroleum.
Dover's wholly owned subsidiary, Slaterdome, Inc., and Slaterdome's partners, together own the working and operating rights interest in certain oil and gas leases covering approximately 32,000 gross acres in northwest Colorado and southwest Wyoming (the "Slater Dome Area"). Slaterdome's interest in the Slater Dome Area was acquired in several purchases and varies from as low as 33.3334% of the interest in some leases, to as much as 62.5% of the interest in other leases. Overall, Slaterdome's ownership amounts to a net working and operating rights interest of approximately 40% in the Slater Dome Area.
Dover's operating partner with respect to the Slater Dome Area is Cedar Ridge, LLC. Cedar Ridge is a highly respected operator in the area, and in the late 1990's was the 12th largest producer of natural gas in the State of Colorado.
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