Quarry focused its exploration and development efforts on two principal areas of interest, the Rigel area of British Columbia and the Ribstone area of Alberta. The program comprised drilling 6 new locations, 5 new oil wells in Ribstone and 1 new gas well in Rigel and completing 2 wells drilled in the prior season, 1 oil well in Ribstone and 1 gas well in Rigel. To preserve certain lands of Quarry and enhance its reserve base, Quarry farmed out 2 gas test wells in the Currant area of British Columbia to its controlling shareholder Assure, for a prospect fee of $450,000, a commitment to drill the wells, and a convertible gross overriding royalty.
As a result of the 6 new wells drilled by Quarry, 5 new oil wells drilled in Ribstone are completed as producers and the 1 new gas well drilled in Rigel was abandoned. Both of the completion wells have been successfully brought onto production. Assure has drilled the 2 gas wells in the Current area to target depth and both wells are presently being evaluated.
In the Ribstone area Quarry drilled 5 directional oil wells off an existing well lease. Quarry completed the newly drilled 5 wells and also completed a well that was drilled and cased during the prior season. Presently all 6 wells are pumping oil at a combined production averaging 14.1 m3/day (88.7 bbls/day) from the Sparky, GP, and Lloyd formations. Quarry management is undergoing evaluations to either re-complete one well as a water injection well or drill a water injection well to increase flow rates and optimize production. Reserves from the 6 well pad are estimated by Quarry's independent engineers at 163,000 barrels recoverable of which Quarry holds a 100% working interest.
The completed gas well in the Rigel area is presently producing from the Dunlevy at an average 530mcf/day or (198 mcf/day net) and 7 bbls/day (2.5 bbls/day net) of associated natural gas liquids which has leveled off from its initial production rate of 2.5 mmcf/day in a normal decline curve associated with this structure. Quarry has a 37.5% working interest before payout, (12.5% interest after payout) in this well.
Quarry exited the year ending December 31, 2003 with 979 boe/d of production, of which approximately 33% is produced from 7 gas wells and 67% is produced from approximately 48 oil wells.
Assure Energy holds a 48.5% stake in Quarry Oil & Gas.
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