Q4 Drilling Program
Redcliffe previously announced the initiation of its fall drilling program, pursuant to which the company expects to drill a minimum of 7 wells, 4-5 in the Pembina area and 3 on the Gold Creek property prior to year-end. During the first quarter of 2008 an additional 4-5 wells are anticipated to be drilled in these two core areas.
At Pembina, Redcliffe will operate the drilling of 4 wells as the first step in our 6 well commitment within the previously announced 67 section block farm-in, offsetting successful gas wells at Crystal and our existing Pembina acreage. These wells will target multi-zone, liquids-rich gas up to 2,100 meters in depth. Site preparation for the Pembina wells is in progress and the first well commenced drilling on the weekend. In addition, Redcliffe has commenced the completion and testing of 4 existing wells within this farm-in project. As a result of a recently acquired operating interest in a gas processing facility in the area, successful Pembina activity is expected to translate into production increases this winter.
In the Gold Creek Wapiti area located on the southern flank of the Peace River Arch. Redcliffe has working interests ranging from 30% to 100% in 30 sections of land. Based on the result of the five wells drilled to date on these lands, geologic mapping, and 3-D seismic, Redcliffe has identified an additional 10 drilling locations following up the two major gas/liquids discoveries made in late 2006. The initial three well (one net) drilling program at Gold Creek has commenced. Leases for two wells (0.7 net) are under construction, and a drilling rig has been contracted with the first well expected to spud by the end of October. With success, tie-in of these wells into the newly expanded gathering and processing system is anticipated to require approximately two months following completion, with production on stream before spring breakup.
Over the course of 2007, Redcliffe has been delayed in bringing production on stream due primarily to third party plant and transportation issues. Over the past several weeks, production has commenced from two of the Company's shut-in wells. Redcliffe's current production is approximately 540 boe/d (2,650 mcf/d of natural gas and 95 bbl/d of oil and natural gas liquids). The Company expects further 2007 production increases estimated at 360 boepd from one shut-in oil well in the Pembina area, tie-in of the Wapiti gas discovery, and commencement of full production from the Gold Creek 13-25 discovery. In addition, the testing and tie-in of up to 4 wells in the Pembina farm-in area, as well any drilling success achieved in our Q4 drilling program, may add to the Company's production capability in Q4 2007. Redcliffe's target production capability at year-end is 1,000 boe/d. In addition, the previously announced business combination with Redcliffe Energy Ltd., completion of which is expected before year-end, will add approximately 250-300 boe/d of production.
Tie-in of the 2006 Gold Creek 13-25 gas well (WI 30%) had been delayed pending the acquisition of sufficient processing capacity. During the summer, Redcliffe, along with partners, entered into an agreement with the current operator of the gathering and compression facilities to acquire a working interest in the compression facilities by paying to increase the compression and through put capability of the facility. Redcliffe is pleased to announce completion of the tie-in operations. One of the zones from this well is now on production at a gross rate of 500 mcfpd and 45 bbl/mmcf of associated liquids. The well is choked back due to limited capacity available pending completion of the compression facilities.
The expansion of the compression facilities at Gold Creek is progressing smoothly and is on schedule for completion during November. Upon completion of the expansion, Redcliffe and partners will own gathering and compression facilities sufficient to process 12.5 million cubic feet per day of raw gas from its current and future wells in the Gold Creek area. Redcliffe anticipates bringing onto production an incremental net 200 boe/d once the expansion is complete with additional capacity remaining for production from new wells being drilled in the area.
Redcliffe's strategy is to build shareholder value through internally generated exploration and development drilling, and through selective acquisitions. Redcliffe explores for liquid-rich, multi- zone gas at depths of 1,500 - 2,800 meters in the Pembina and Peace River Arch areas of western Alberta.
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