Purcell's 2004 capital budget of $36 million includes $23.5 million for drilling and completions, $6 million for land and seismic, $5 million for facilities and $1.5 million for acquisitions. This budget will be financed by Purcell's cash flow for the year.
Fort Liard, NWT -- On January 13, drilling commenced on the Purcell 24-percent-interest 3K-29 well. This 60-day development well will be drilled directionally to a depth of approximately 3,700 meters from the existing K-29 facilities site. The well is expected to start production in May 2004 at approximately 25 mmcf/d of raw gas (17.5 mmcf/d of sales gas).
A second development well, the 24-percent-interest 2M-25, will spud immediately following completion of 3K-29. The second well is expected to be onstream during the third quarter of this year, also at an expected rate of 25 mmcf/d of raw gas (17.5 mmcf/d of sales gas). Since first production in May 2000, aggregate gross production of the initial four wells from the Fort Liard gas pool is approximately 114 bcf of raw gas (80 bcf of sales gas).
Tenaka, BC -- The first exploratory well on Purcell's extensive Tenaka lands recently spudded. This well is expected to reach total depth of 2,900 meters in early March 2004. Purcell is participating for a 25 percent interest to earn 37.4 percent after payout of costs. Drilling of a second Purcell 28-percent-interest exploratory well is expected to start this week.
Over the past three years Purcell assembled a strategic landholding with interests varying from 28 to 90 percent in approximately 52,000 gross acres of natural-gas-prone acreage adjacent to the Adsett gas field. The wells are testing two Slave Point gas prospects out of many identified by a 120 km2 3D seismic program shot last year over Purcell's north block. A second 162 km2 3D seismic survey (Purcell approximately one-third interest) is being completed over the south block this winter. Drilling success in this area could lead to a multi-year exploration and development program.
Doris, AB -- Purcell is currently drilling the first of three exploratory wells in the Roche area (North Doris) where the company has a 34 percent working interest. Purcell holds working interests ranging from 34 to 56 percent in approximately 90,000 gross acres (47,000 net acres), including recent land purchases, in the greater Doris area northwest of Edmonton in central Alberta. Drilling at Roche is following up on a gas discovery drilled in 2002. Purcell reprocessed 2D seismic data over the Roche lands to develop the play. Concurrent with the drilling program, Purcell is participating in the construction of a 22-kilometer pipeline to its 28 percent-owned Doris South gas plant to tie in the original Roche discovery well and two other shut-in gas wells along the pipeline route. The pipeline will allow Purcell to tie in successful wells before spring break up. The new gathering line will enable the company to produce from future wells drilled on its large undeveloped land position over the next few years.
Obed, AB -- The company is currently drilling a 3,300-meter well at a 50 percent interest in Obed in northwest Alberta. The prospect has multi-zone, liquids-rich gas potential. The well is expected to take 30 days to drill, with results anticipated in February 2004. The prospect is close to infrastructure that should enable quick tie-in of a gas discovery. West Pembina, AB -- Purcell has made five discoveries out of six exploratory wells drilled since mid-2003 in West Pembina. This area offers multi-zone potential for liquids-rich gas and light oil. The five 50 percent-interest wells have encountered five gas and two oil zones. Purcell expects all five wells to be on production by the end of the first quarter of 2004. The company has various working interests in approximately 12,000 gross acres (5,000 net acres) in this developing core area. Several additional wells will be drilled this year.
Lochend, AB -- In the third quarter of 2003, Purcell drilled a 40 percent working interest (to earn 50 percent) Elkton gas prospect 40 km northwest of Calgary. The well was completed and flow-tested in December and shut in for pressure build up. Analysis of the pressure data suggests a limited non-commercial gas pool. The company intends to review its 3D seismic data to determine if other opportunities exist in the area. Pigeon Lake, AB -- Last year Purcell drilled a 50 percent-interest gas discovery at Pigeon Lake. Tie-in of this well should be completed in February. In the second quarter of 2004, the company plans to drill as many as three follow-up wells in this area.
Muskwa, BC - The company is currently completing workovers of two 28 percent-interest wells on this Slave Point gas property in northeast British Columbia.
Other Operations -- The company continues to exploit its existing production base with infill drilling and exploitation activities slated for Weyburn/Tatagwa, Griffin and Minton in southeast Saskatchewan, and for Penhold and Turin in Alberta. Purcell also continues to build its portfolio of full-cycle exploration projects in west Alberta and northeast British Columbia.
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