Great Plains Exploration's winter drilling program has been kicked off with three different drilling operations currently underway at Crossfire, Pembina and Morinville. The Crossfire well is the first of several wells which Great Plains and its partners have planned for 2008. Great Plains holds a 40% working interest in the well (33.6% after completion) which will evaluate a one million barrel light oil target in the Nisku formation. Also, in the general Pembina area, Great Plains is drilling a Mannville/Jurassic gas target which offsets a well that is currently producing 2.5 MMcf/d with 1.5 Bcf produced to date. Great Plains is the operator of the well and holds 100% working interest. Success at this initial location will create several new opportunities for follow-up drilling.
Additionally, Great Plains, as operator and 50% working interest holder, has commenced drilling operations at Morinville where 3D seismic has defined a number of light oil targets. These targets are estimated at 150,000 bbls per well with neighboring pool sizes of 1.6 million bbls. The Company is also gearing up for another busy winter program in the Randell area where 3D seismic has also been used to identify several light oil targets. Service rig activity is commencing right away on various re-completion and work-over projects at Randell, with drilling beginning immediately in 2008. At this point, Great Plains expects to operate two drilling rigs in the Randell area with four to eight wells contemplated for the winter program. Three wells will be drilled at 100% working interest with up to an additional five locations to be drilled at a nominal cost to the Company, and subject to a casing point election by Great Plains. Great Plains will operate all eight locations.
The foregoing operations form part of a $19 million capital budget which the Board of Directors has approved for 2008. The expenditures will be focused primarily on light oil in the Company's core areas of Crossfire, Pembina, Randell and the Peace River Arch. As part of the capital program the Company expects to participate in the drilling, completion and tie-in of up to 6 (net 3.4) exploratory wells and up to 10 (net 5.4) development wells, in addition to increasing its seismic and land positions in these core areas. The capital budget includes the potential completion and tie-in costs in 2008 for the three wells that are being drilled in December 2007.
The Company is also pleased to announce that it has closed a private placement of 1,705,882 Common Shares at $0.85 per share, issued on a flow-through basis, for aggregate proceeds of $1,450,000. The private placement was completed on a non-brokered basis with no commission or agency fees paid. The proceeds of the private placement will be used towards the 2008 capital program summarized above.
Investors should note that boes may be misleading, particularly if used in isolation. A boe conversion rate of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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