Signet Energy Inc., the Operator, reports on December 6, 2005, that it has successfully drilled and cased the first well in the Sawn Lake heavy oil project. The Operator stated, "the drilling consisted of a vertical well to the depth of 680 meters followed by a horizontal leg of over 600 meters." The Operator expects that the production testing of this well will be completed by the middle of January 2006. They additionally announced, "laboratory analysis determined the core from the vertical well has an average porosity of 32%, permeability in the range of four darcys, and over 40 feet of oil pay, ranging from 10 to 13 API."
Two previously published independent engineering reports estimate that there are between 820 million and 1.2 billion barrels of original oil in place. Deep Well expects that 10% of the 820 million to 1.2 billion barrels will be recoverable by conventional cold flow pumping methods. Deep Well believes the market price for this heavy oil to currently be about $45.00 per barrel. Fully developed it is believed production could exceed 50,000 barrels of oil produced per day using only conventional cold flow methods. These results may be significantly enhanced by secondary recovery methods such as hot water flooding.
Deep Well owns 31.4% of the Operators shares, in addition to a 40% undivided working interest in the Sawn Lake heavy oil project. The Operator must conclude another nine horizontal wells at no cost to Deep Well to fully earn their 40% working interest in the project.
Other heavy oil projects in the area include Black Rock Ventures Inc. and Shell Peace River (SHO:TO), which are within a 100 km (60 mile) radius of the Sawn Lake project.
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