A 24-hour production test was completed on the well. It flowed 100 barrels of oil per day on a 12/64 choke. Pressure stabilized at 230 lbs/ft with the producing zone less than 3,000 feet from the surface. The well is planned for production next week with a slightly larger choke size. During testing, the F-12 well produced no water or gas. If initial production rates are sustainable, the F12 well could generate gross payback in less than 60 days.
The PP F-12 field is a major discovery for the company. Development of the field is to begin immediately with two development wells being drilled. The Company estimates having all three oil wells drilled and producing by December. After production data is received and analyzed, additional development wells in this field are expected to be drilled in 2008. Other development plans include horizontal drilling, which can result in production increases of 200% or more.
Lexaria holds a gross 30% working interest in the PP F-12 discovery well and all development wells drilled on the 160-acre lease. Lexaria also holds a gross 50% working interest in future wells in the Palmetto Point area, which surrounds all sides of the PP-F12 lease. All 32,000 acres of the Palmetto Point area have been shot with 3D seismic. Lexaria considers the Palmetto Point F-12 well and field to be an important discovery. Its exploration team is pursuing possible similar targets in the Palmetto Point area. Additionally, Lexaria has completed the drilling of two, gas exploration wells – the PP F-90 and the PP F-100. Both wells encountered natural gas, but in quantities considered uneconomical. These wells are being plugged and abandoned.
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