All road, pad and pit construction have been completed in preparation of drilling of the No. 2-12 and No. 1-12 North Barcus Creek wells to the base of the Iles formation of the lower Mesaverde Group sands at 11,500 feet. The drilling program comprises a two-stage process. Lang Exploratory Drilling has contracted to drill two wells to a depth of approximately 3,000 feet and case the surface holes. Subsequently, a deep rig will drill each well to a total depth. Combined drilling and testing time for these first two wells is estimated to be 100 days.
The No. 2-12 well will be drilled first, followed by the No. 1-12 well. The No. 1-12 well is a direct offset to a well drilled in 1979 to a total depth of 15,700 feet, known as the federal No. 22-12 well. Brownstone's partner, Dejour Enterprises Ltd. (CDNX:DEJ.V - News) has engaged Gustavson Associates, Boulder, Colorado, to conduct a petrophysical analysis of the federal No. 22-12 well in comparison with the pending No. 2-12 and No. 1-12 wells. Dejour has advised that in its report, Gustavson discloses that it is its interpretation from log (logged by Schlumberger) analysis and tests run on the No. 22-12 well, that there exist reservoir properties, inclusive of over 260 feet of possible pay, that are similar to other wells in the Rio Blanco county area, which produce gas from the Williams Fork/Mesaverde formations.
Gustavson further reported to Dejour that these reservoirs in general, and particularly the upper Mesaverde group, are composed of many vertically stacked fluvial to alluvial sand bodies that are interbedded with shales and often coals. However, the lower Mesaverde group - the Iles formation - comprises nearshore and shoreline sandstone reservoirs that are much more laterally extensive.
Estimated 100 per cent drilling and completion costs (including a comprehensive fracing and testing program to be carried out by Halliburton, recognized as one of the most technically experienced completion consultants in the basin) are $4.3-million (U.S.) for each of the North Barcus Creek wells. Brownstone will finance its 10-per-cent share of these costs on an unpromoted basis.
These two wells are the first wells to be drilled by Brownstone and its partners on almost 290,000 acres of landholdings in the Piceance-Uinta basins respectively of western Colorado and eastern Utah, acquired since July of 2006. The North Barcus Creek prospect, covering 1,590 acres, is one of three separate landholdings totalling over 5,000 acres within the highly promising Rio Blanco deep project area of the Piceance basin.
Within the same project area, Williams Cos. is comprehensively testing several wells drilled to the base of the Iles formation on Exxon lands. The Williams wells offset initial Rio Blanco deep production established by Bass Operating of Fort Worth, Tex., from three wells, now placed on line with pipeline and related facilities recently completed to access this new production area.
The Williams Cos. wells represent the initiation of an extensive exploitation program by Exxon to drill 1,000 wells on its landholdings as expediently as possible. Also within the same project area, Conoco-Phillips has two rigs continuously drilling on extensive landholdings held in JV with Encana USA. Brownstone and its partners hold 640 acres of leases within the confines of this Conoco-Phillips/Encana USA JV.
Brownstone and its partners plan to drill a total of four separate locations at North Barcus Creek. If satisfactorily completed, the partners expect that these lands will be fully developed on maximum 40-acre spacing units. The partnership strongly believes that this project area, with access to the deepest basin-centred reservoirs of the Piceance basin, has the potential to yield significantly more natural gas with greater long-term deliverability than is the average to date in the basin. Accessible pipeline facilities lay within one mile of the lease boundaries.
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