Flow-testing and completion operations for the N. Barcus Creek #1-12 discovery well located in Rio Blanco County are continuing. All frac fluids have now been recovered. The operator is assessing additional work to ensure the optimum completion method for production from these significant reservoirs. The time spent establishing the completion methodology at the #1-12 well will assist in the completion program for the N. Barcus Creek #2-12 well and all future wells bearing similar geology on this lease block. Flow rates have continued to meet the operator's expectations.
Brownstone and its partners at the N. Barcus Creek Prospect have received permits to allow the drilling of 2 additional wells on this 1590 acre lease block, where Brownstone and its partners have drilled, cased, logged and currently testing for production two wells, each yielding in excess of 250 feet of net indicated gas pay.
Brownstone holds a 10% unpromoted interest in these lands and all exploration expenditures. Current spacing unit approvals from the BLM allow for the drilling of an estimated 38 wells based on 40 acre spacing. In the future, further down-spacing to 10-acre units is likely.
This N. Barcus Creek lease block lies directly between a large Exxon lease block directly to the east and a large lease block owned by EnCana to the west. The Exxon lands host four recent natural gas resource discoveries drilled by Williams Cos. immediately offsetting the Company's leases. Exxon previously announced its intention to drill 1000 wells on its leases in that area. Recently, Conoco-Philips announced its intention to commence drilling the first of 800 wells on the EnCana lands, which are now subject to a Conoco-Philips joint venture, early in 2008.
N. Barcus Creek is one of three lease blocks totaling approximately 5010 acres within the Rio Blanco Deep project area.
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