CREDO Says Oklahoma Drilling Program on Track

CREDO Petroleum reports that during fiscal 2004 on its Anadarko Basin property in Oklahoma, 13 wells have been drilled of which nine are producers and four are dry holes. This brings the total wells drilled on the acreage to 49 of which 37 have been completed as producers. Four additional wells are currently on the fall drilling schedule.

Previously the company reported that its Horseshoe #1-7 well encountered six feet of porous Morrow sand that drilling data and electric logs indicated would be productive. However, the subsequent completion did not recover commercial amounts of gas, and the well was plugged. This was the first well drilled on the company's 1,920 gross acre Horseshoe Prospect in Harper County. Additional wells are expected to be drilled. CREDO is the operator and owns a 49% working interest.

Approximately twelve miles to the northwest, the Owens 3C #1-28 is the third well drilled on the company's 2,560 gross acre Buffalo Creek Prospect in Harper County. The 6,900-foot well offset the company's Owens #1-21 discovery well that was recently completed as an Oswego oil producer. The Owens 3C encountered 18 feet of relatively tight Oswego limestone. It is currently testing small amounts of oil and gas and is expected to be a marginal well. CREDO owns a 30% working interest.

Also on the Buffalo Creek Prospect, the Owens A #1 was drilled to test the Morrow, Chester, Oswego and deeper zones. The company believes that the 8,800-foot well will be non-commercial. Accordingly, it elected not to participate in the completion attempt. CREDO owned a 29% working interest.

About 40 miles to the south, the Skyler #1-6 is the first well drilled on the company's 1,280 gross acre Gage Prospect in Ellis County. The 9,175-foot well encountered approximately 30 feet of Morrow sand that appears to be productive. The well is currently awaiting pipeline connection before being completed for production. An offset is planned for the first quarter of 2005. CREDO owns a 51% working interest and is the operator.

Approximately 25 miles to the north, the company drilled a rank wildcat on its 1,920 gross acre Glacier Prospect located in Harper County targeting the Morrow and Chester formations. The 7,500-foot well encountered only two feet of porous Morrow channel sand and was plugged due to the likelihood of marginal production. An offset to be drilled this year will target a thicker portion of the channel sand. CREDO is the operator and owns a 65% working interest.

About five miles to the west, the Derby #2-22 was drilled on the company's 17,000 gross acre Sand Creek Prospect. The 7,400-foot well did not encounter productive Morrow or Chester sands and was a dry hole. Another well is planned for the first quarter of 2005. CREDO owns a 32% working interest and is the operator.

James T. Huffman, President, stated, "Although we are disappointed with the number of dry holes drilled in the third quarter, they are an unavoidable part of our business and provide valuable information for orderly development of our prospects. Our drilling focuses on excellent prospects that have good potential for expansion. We are confident this will continue to yield excellent results like those we have enjoyed for the past several years."


This year, the company has installed its patented Calliope Gas Recovery System on three wells located in Oklahoma. A fourth well is currently being prepared for an installation and two additional systems are scheduled for installation.

Two of the three completed installations are prototypes to test Calliope on wells with known reservoir damage caused by the "parting shots" of previous operators. These prototypes represent very rigorous challenges for Calliope which could further expand its application envelope. The company is performing reservoir treatments on the wells designed to mitigate the reservoir damage, including fracture stimulation of one well. Additional procedures to increase production are being reviewed. CREDO owns an 80% working interest and is the operator.

Many older, low pressure gas wells have wellbore and reservoir damage caused over time by numerous factors. Treatment procedures to remediate such damage are generally not practical in low pressure reservoirs because the treatment fluids load-up the well and are often impossible to recover. It is the company's intent to demonstrate that Calliope can normally remove such treatment fluids, thus substantially increasing the probability of successfully treating low pressure reservoirs.

The company recently installed a Calliope system on the 7,800-foot Jacobs well located in Grady, County, Oklahoma. The well had produced 3.4 Bcfg but had been dead for four years at the time the company took over operations. The system has been operational for only a few days and no data is currently available regarding how the well might respond. CREDO is the operator and owns a 70% working interest.

A second Jacobs well located in the same area is currently being prepared for a Calliope installation. The primary producing zone in the well was abandoned by the previous operator in favor of recompleting the well in an up-hole zone. Accordingly, the company must squeeze the up-hole zone and then drill out plugs in order to regain access to the primary productive zone which `produced 13.3 Bcfg and has been dead for four years. Work to regain access to that zone is currently in progress. CREDO owns 81% and is the operator.

The company is preparing to install Calliope systems on two additional wells. Both wells are located in Canadian County, Oklahoma and produced from the Morrow formation at 10,000 feet. They had cumulative production ranging up to 16.2 Bcfg (billion cubic feet of gas). The wells were uneconomic or dead at the time of purchase.

"Calliope has proven to be reliable and flexible over a wide range of applications on wells the company owns and operates", Huffman said. "It has also proven to be consistently successful. This has resulted in an impressive track record for the new technology. Accordingly, the company has recently begun testing new types of applications designed to expand the population of wells on which Calliope should be installed."

Huffman further stated, "We have also implemented previously discussed strategies to increase the number of wells on which Calliope will be installed. Among other things, the company has retained highly qualified personnel to execute its strategies and has completed the Calliope multimedia presentation. Other related information is considered proprietary at this time."
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