Drilling for well 303-1 began at approximately 6:00 p.m. on Monday, March 5. Cementing of surface casing was completed this morning. The 12 well program is on track and management anticipates tie in to facilities and steaming to commence in May 2007.
Once installation of the blowout preventer and pressure testing is complete, drilling out from under surface casing will commence. It is anticipated that the first well will reach total depth early Wednesday.
The 12-vertical-well program totaling approximately 13,250 feet will consist of a pattern of four injector and eight producer wells targeted to produce from the Newcastle sandstone formation. Derek's consultants selected the well placements based on targets identified using the $1.1 million USD, high definition 3D seismic survey completed over 2880 acres (4 1/2 square miles) of the 8000 plus acre LAK Ranch property. Within the program area, the pay zone is estimated to be 40 to 70 feet thick. The estimated drill budget is US$2.1 million.
This 12 well program is being conducted jointly with a third party on a fifty-fifty cost basis, with the third party receiving fifty percent of the revenue until payback on their initial investment is met. Once payback is met, the third party's revenue interest (only on the 12 well program production) will revert to forty percent. Derek will have a 95% working interest in any current and future development and production on the property outside this 12 well program area.
Derek Oil & Gas Corporation is a Canadian based, publicly traded oil exploration, development and production company that utilizes enhanced oil recovery (EOR) techniques to develop new production from reservoirs in North America. Derek's current focus is on the further development and increasing production from their prime property located in NE Wyoming's prolific Powder River Basin.
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