Galleon Energy Inc. reported the results of the company's most successful annual drilling program. A success rate of 89% was recorded resulting in significant growth in production, reserve value and drilling inventory.
In 2007, 93 wells were drilled and 83 wells (74.8 net) were cased for an 89% success rate. Wells cased for production include 29 light oil (26.7 net), 49 natural gas (44.5 net) and 5 heavy oil (3.6 net). 28% of these wells were exploratory.
During the second half of 2007, Galleon focused its drilling program towards light oil to take advantage of high crude oil prices. Six of 7 previously defined exploration areas were successfully converted into new producing properties. The success of the 2007 exploration program has further enhanced Galleon's portfolio of light oil and natural gas projects with long life reserves and good well productivity. In 2008, Galleon will continue to focus on expanding its light oil, high netback projects.
In fourth quarter 2007, 22 wells were drilled and 19 wells (18.0 net) were cased for an 86% success rate. Wells cased for production include 8 light oil (8.0 net), 10 natural gas (9.5 net) and 1 heavy oil (0.5 net).
Due to the drilling success achieved in 2007, Galleon's planned capital and drilling program in Q1 2008 will be the largest in the company's history. Approximately $68 to $73 million has been allocated with 35 to 40 wells planned. Up to 10 high impact exploration wells are planned in Q1 2008.
Upon closing of the acquisition of ExAlta Energy Inc., Galleon's credit facilities were increased to $265 million comprised of a lending base facility of $250 million and an acquisition facility of $15 million.
Galleon has entered into one term natural gas contract and two crude oil financial contracts. The natural gas contract for 10,000 GJ/day has a term from February 1 to December 31, 2008 with pricing subject to a costless collar of $6.00/GJ and $8.00/GJ Canadian. During 2008, one crude oil costless collar contract for 2,000 bbl/day is in place with a floor of $70.00 CDN WTI and a ceiling of $80.75 CDN WTI. A second crude oil costless collar contract for 1,000 bbl/day is in place with a floor of $75.00 US WTI and a ceiling of $100.00 US WTI.
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