Under the arrangement it is contemplated that initially, a flowline will be connected to the well, allowing production to commence by natural flow against facility pipeline pressure at a rate of approximately 700 - 800 bbls/d. The flowline is expected to be in place towards the end of the third quarter of 2006. An electric submersible pump (ESP) will be installed within three months after tie-in, potentially bringing production rates up to an estimated 1,300 to 1,600 bbls/d as initially expected for the Toparoa-1 well. Avery has earned a 35 percent interest in the production license.
Avery has also signed a letter agreement dated June 2, 2006 to receive a significant payment from its partner in the Toparoa-1 well to recognize the delay in production start up. The payment is subject to a final agreement and details will be released as soon as they are available. Once received, the funds will be added to Avery's treasury for its ongoing exploration and development program.
"With this arrangement, the overall economics of the Toparoa-1 well are excellent," said David Little, chairman and CEO, Avery Resources. "Equipping and tie-in costs will be negligible compared to the original plan which contemplated producing into tanks and trucking the oil. We also anticipate a significant reduction in operating costs and down time. This is a good arrangement for Avery. "
Avery also announces revised timing for the drilling of the Light Fingers-1 due to rig availability in the Cooper Basin area. The Light Fingers-1 well is a look-alike prospect to the Toparoa oil discovery. A rig is scheduled to drill Light Fingers-1 during the third quarter of calendar 2006, probably in July. Drilling of Light Fingers-1 will complete Avery's earning requirements for the balance of the Murteree High Block containing approximately 13,000 acres, giving the company a 35 percent working interest in the block.
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