"We're pleased with the progress the U.S. team has made on all fronts," said Richard Wadsworth, President. "There's been a considerable amount of activity over the past six months, which has assisted in better defining the potential of our shale basins. I'm confident that the ongoing dedication and expertise of this group is going to create positive results for the Company and its shareholders."
Arkoma and Ardmore Basins, Oklahoma
In Oklahoma, Bankers successfully fracture stimulated its first well, the Nickel Hill No.1-26 (75% working interest), which was drilled to a total depth of 9,983 feet in December 2006. The well was fracture stimulated and has since been flowing back for approximately two-and-a-half weeks with 25% of the frac fluid yet to be recovered. The well had a stable rate of 470 mcf of natural gas per day along with six barrels per day of condensate over the past five days. The Nickel Hill No.1-26 well has 330 net feet of Woodford shale and a calculated original gas in place (OGIP) number of 222 BCF per section based on Schlumberger's gas shale log analysis.
"The Woodford shale is proving itself to be a significant shale play in the U.S.," said Wolf Regener, President, Bankers Petroleum (US) Inc. "Our acreage is showing positive results from our exploration activity and we expect to develop this into a production area. We are happy with the Nickel Hill No.1-26 well's rates as a vertically drilled and completed well. There is potential for initial rates from horizontal wells to be significantly higher, based on results reported by other operators in the Woodford shale."
The fracture stimulation in the Nickel Hill No.1-26 was monitored with a surface seismic array to provide information on fracture direction and dimensions. The array was subsequently used to acquire a 3D seismic survey around the well. The results of this are being processed and will be used to aid in the selection of an offset horizontal well location, which is planned to be drilled in the first half of 2007.
In addition, Bankers is planning a broad 3D seismic survey in the Carter and Johnson Carter County areas on the Company's 14,000 net acre block. Information from the survey will be utilized in the creation of a field development plan.
In Hughes County, the Lake Holdenville No.35-1 well (89% working interest) was drilled to a total depth of 5,499 feet and cased in late December. The Woodford shale encountered a net thickness of 160 feet and has 63 BCF per section of OGIP as indicated by the Schlumberger log analysis. Analysis of additional technical data from this well will be used to design a fracture stimulation planned for the first quarter of 2007. Establishment of production from this well would expand the productive Woodford shale area currently being developed by other Hughes County area operators.
Palo Duro Basin, Texas
Bankers fracture stimulated and tested the Misener No.1 well in both the Granite Wash Sands as well as the Bend shale interval. These stimulations have not resulted in economic production rates. Based on the highly naturally fractured reservoir indicated by logs on this well and the low flow rates experienced, the Company suspects that the formations may have been damaged through the drilling or completion operations on the well. Bankers plans to commingle the intervals and evaluate the combined production rate until further information is obtained about the basin prior to undertaking additional work. The Company also fracture stimulated the Cogdell No.1-1 well in zones that had produced at a reported 2.8 million cubic feet of natural gas per day upon initial completion in 2003; however, the stimulation was unable to regain any significant gas productivity.
"While we would have liked these two wells to produce at higher rates, we still believe in the potential of the basin," said Mr. Regener. "We've known that it may require a longer time frame to determine how to economically produce the hydrocarbons in this basin. We expect that the methodological application of the science will help identify the sweet spot, and enable us to eventually accomplish this goal. We look forward to drilling the next well, which we hope provides positive results."
Bankers plans on drilling its first Palo Duro well of 2007 near the existing Cogdell No.1-1 well, utilizing underbalanced air drilling through the target horizons, with the objective of minimizing reservoir damage, which can be critical to economic success. This follows the apparent success of another operator in the basin that had encouraging early results using the same technique. Bankers has released its contracted drilling rig and is making arrangements for another rig to drill its Palo Duro wells.
Appalachian Basin, New York
Bankers drilled and set intermediate casing on its Butler Creek well to just above the Company's main objective, the Trenton-Black River formations. The rig is moving to the second location in the three well program, South Mill Pond, to drill and case the intermediate hole. Following this, the rig will move to the last well, Legasse Road to perform the same operation, depending on weather. After intermediate casing is set in all three wells, Bankers plans to re-enter each and drill out the wells utilizing air drilling techniques.
In addition, fracture stimulations on two existing wells are expected to be performed during the first quarter of 2007, which had been planned for late 2006. This is slightly later than originally anticipated as workover rig unavailability resulted in delayed preparatory work on the wells.
Bankers Petroleum Ltd. is a Canadian-based oil and gas exploration and production company focused on opportunities in unconventional petroleum assets. Bankers holds interests in four prospects in the Northern and Central regions of the United States, where it is currently pursuing the exploration of shale gas plays. It also operates in the Patos-Marinza oilfield in Albania pursuant to a license agreement, producing heavy oil.
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