Dagang - Gross production from this project reached highs of 1,275 BOPD during the past week. We have drilled seven successful development wells, six of which are on production and one in completion stage. Three drilling rigs are working around the clock, however excessive wet weather conditions have delayed progress on both drilling and completion operations. The company plans to have 23 development wells drilled by year-end. The development plan approved by PetroChina calls for 115 wells to be drilled over the next 2- 1/2 years. Ivanhoe has a 60% working interest in this project and is the operator.
Zitong - A 2-D seismic program was completed on the company's 900,000-acre Zitong block, in the Sichuan Basin, and an exploration well is in the planning stage. The company has a 100% working interest in Zitong.
South Midway-Sunset - Four successful oil wells have been drilled this year, with two of the wells extending the field boundaries. One exploration well and two step-out wells were unsuccessful. Production from Ivanhoe's total South Midway-Sunset Field area is approaching 600 BOPD from 55 wells. Ivanhoe has a 100% working interest in this project. Current prices for Midway-Sunset heavy oil are over $35/barrel.
Citrus (Lost Hills) - Three wells have been successfully drilled to date this year. Two of the wells currently are flowing at a combined rate of 200 BOEPD. The third well is scheduled to be fracture-stimulated and begin producing in August. Up to twenty additional development wells could be drilled on Ivanhoe's 2,400-acre block that encompasses the southeastern extension of the Lost Hills Field. Ivanhoe has a working interest of 83% to 100% in this lease block and is the operator.
Knights Landing (Sacramento Basin) - Three new gas discoveries were made out of nine wells drilled in the company's initial drilling program, and the wells will be put on stream later this month. Ivanhoe currently has four additional wells on production. Three new wells are planned before the end of the year to follow up these discoveries. Ivanhoe has a 60% to 65% working interest before payout and a 50% interest thereafter.
Sledge Hamar (South Belridge Field) - Ivanhoe has one producing discovery well in this prospect. One new well has been drilled and is expected to be tested soon.
LAK Ranch - Steaming commenced during the second quarter on the initial horizontal well. The well was then "turned around" and started producing high-quality, 19-degree, API gravity oil and condensed steam. After receiving permission from state authorities, a second higher temperature and pressure steam cycle was initiated to put substantially more heat into the reservoir. After this initial pilot phase, Ivanhoe will evaluate whether to proceed with the full field development of this 7,500-acre lease block. Third-party engineering estimates put the oil-in-place at 100 million barrels or more.
East Texas -Two exploration wells are planned in September under a farm- out agreement in which Ivanhoe will have a carried interest of 25% in the Malakoff and Catfish Creek prospects.
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