Buffalo Resources Corp. achieved its 2007 market guidance targets and provides operational update for the period to December 31, 2007.
Initial estimates place Buffalo's December 2007 exit production rate at 4,200 boe/d with at least 250 boe/d ready to be brought on production from an additional four wells (3.0 net), including a discovery well at Expanse which is awaiting tie-in and three wells at Frog Lake which had been drilled and were awaiting completion at year-end. Buffalo's exit production rate was in line with the Company's prior market production guidance of between 4,200 and 4,500 boe/d resulting in daily average production for the 10 month financial year of approximately 2,900 boe/d. During 2007, Buffalo drilled a total of 29 (19.2 net) wells with a 92% success rate.
As a result of the change in year-end from February 28 to December 31, Buffalo's 2007 financial year included only 10 months and the final interim reporting period was for the four months from September 1, 2007 to December 31, 2007.
During this four month period to December 31, 2007, the Company carried out an active capital program that included drilling 14 (9.2 net) wells.
The Company drilled nine wells of which five wells were on production by December 31, 2007, three were awaiting completion and one is being evaluated. A further two wells were drilled in January 2008 with the result that at least five additional wells should be completed and placed on production by the end of January. A Holding Application has been submitted to the Alberta Energy Utilities Board for heavy oil drilling on Buffalo's Frog Lake lands and, upon approval, will allow Buffalo to proceed with the drilling of up to an additional 150 locations over the next two years.
A D&A well was drilled at Malmo and a previously drilled well at Wetaskiwin (0.3 net) was brought on stream in December. At Killam North, the Company completed construction of its centralized oil battery, capable of handling 1,000 bbls/d of fluid and one MMcf/d of natural gas.
Buffalo drilled four wells. A discovery well was drilled at Expanse. A short term test indicated production capability from two zones at rates totalling in excess of 1 MMcf/d with associated liquids. Plans are underway to have this well tied-in and on stream before spring break-up. The Company owns nine sections of land in the area (7.5 net) and is planning to shoot 3-D seismic in the first half of 2008. At Cecil, two wells were drilled and cased before year-end and will be evaluated in early 2008. A well was drilled and cased at Valhalla (0.1 net) and should be completed in January 2008. A 30 square mile proprietary 3D seismic shoot at Clayhurst was initiated in December and completed in January 2008.
The Company is planning a $28 million capital expenditure program as follows: $19 million on drilling and completions; $5 million on facilities; and $4 million on land and seismic. This program includes drilling a total of 34 wells (19.0 net) of which 18 (8.0 net) will be at Frog Lake in eastern Alberta, 9 (4.8 net) in central Alberta, 1 (0.8 net) in the Foothills of southern Alberta and 6 (5.4 net) in the Peace River Arch in northern Alberta, all on Company owned lands.
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