Cougar O&G Boosts Production at Trout, Preps Manning Area for Farm-Ins

Cougar O&G provided an operations update for the Trout production area and the Manning heavy oil farm-in.

Drilling Update

The drilling, completion and workover operations in the Trout field have finished and the equipment has been demobilized back to the Red Earth area in anticipation of spring road bans. The planned second new drill has been deferred until the Corporation's Q3 drilling program. There was not enough time to drill the second well before the spring weather resulted in road bans being implemented in Alberta. If the drilling rig was not moved off before road bans the Corporation would have been responsible for a very large stand-by charge every day the drilling rig and equipment was stranded by the road bans so the decision was made by management to demobilize the drilling equipment after the first well was finished.

Cougar finished drilling the horizontal Keg River oil well on March 20th. The horizontal leg was successfully drilled in the top two (2) meters of a ten (10) meter thick Keg River zone and has approximately 400 meters of horizontal productive formation. Upon entering the Keg River formation there was an immediate loss of circulation and increase of wellbore gas indicating a substantial reservoir was encountered. Using electro-magnetic directional tools the Corporation was able to successfully steer the horizontal wellpath to the required endpoint.

Once the drilling rig moved off the horizontal location the service rig and production equipment were moved on and rigged up. The Keg River in the Trout field has excellent inflow capability due to the substantial porosity and permeability and as such does not require the costly and time consuming stimulation work required by most of the current tight oil plays. The completion operations for Cougar's horizontal well consisted of landing the tubing string and swabbing in multiple spots along the toe to the heel of the horizontal wellbore to confirm and induce formation inflow. Throughout the swabbing test the fluid level was maintained in the casing indicating a strong inflow of formation fluids. The final production equipment including the bottom hole pump and rods was run and the well has been put on production. It is anticipated it will take several weeks to recover all of the lost drilling fluids and begin producing the Keg River reservoir fluids.

Work Over/Reactivations Update

During the last couple of months Cougar has been working on several well reactivations in the Trout production field.

The 10-21 reactivation involved deepening the existing well by approximately 15 meters to penetrate a previously unproduced Keg River oil formation. Last week the Corporation successfully installed a packer in the wellbore to shutoff an uphole water source which will allow for the Keg River to be efficiently produced. The well also had a temporary hydraulic pumpjack installed on it and this has been replaced with a conventional pumpjack which will allow a substantially larger production rate.

The 13-25 reactivation involved repairing a wellbore and pumpjack that had been shut in for over three years. The downhole work was successfully repaired with no problems but the pumpjack repair took longer due to time required to get the gear box repaired. A maintenance crew recently finished all of the repair work and the well is currently on production.

The 11-22 reactivation involved a series of downhole repairs and installation of surface equipment. The downhole work included replacing a badly corroded production liner and stimulating the productive Keg River zone with an acid wash. The surface equipment will be moved from another site once the snow has melted and the lease has dried up. It is anticipated the 11-22 reactivation will be finished in Q2.

The reactivated wells also benefit from a 5% royalty holiday for the first twelve months of production. The royalty incentive was put in place by the provincial government and provides for very attractive economics and a quicker project payout.

3D Seismic Update

Cougar has completed the initial review of the processed 3D seismic data that was acquired in January. The seismic data confirms the multi-well vertical and horizontal development potential of the existing Keg River and Granite Wash oil pools but the 3D seismic also identified several new undeveloped oil reservoirs. The development drilling locations are key to increasing production and cash flow and the new undeveloped reservoirs can add significant reserves for the company to pursue. The Corporation is finalizing the locations for the next drilling program and expects to begin the permitting process by the end of April once the next phase seismic review has been completed.

Manning Heavy Oil Farm-In Update

Cougar has also continued the preparation for the Manning area heavy oil farm-ins. The geological review has included core and log analysis and detailed geological mapping. Several drilling locations have been identified and the Corporation expects to begin the permitting process for these heavy oil prospects by the end of April.

Mr. William Tighe, CEO and Chairman of the Board for Cougar stated, "We are very excited to be able to provide this operations update to our shareholders. There has been a lot of progress in our Trout production area, the planned development using the Trout 3D seismic and the project planning for the Manning area heavy oil prospect.

"The reservoir that was encountered during the drilling of the Keg River horizontal well confirmed the advantages of this type of production prospect. Instead of having to coordinate and execute a very expensive multi-stage fracture stimulation we were able to get the well on production in less than 5 days.

"The new 3D seismic has provided a tremendous opportunity to develop existing reserves and it also identified some tremendous structural prospects with the potential to add new reserves and cash flow for the company.

"Cougar has also made significant advancements in regards to the Manning heavy oil project development. With the continued strengthening of the oil commodity prices the Manning prospect may ultimately have the greatest strategic value to the Corporation."


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