Colonia Energy reported the drilling of its fourth successful Midale oil well on its core Florence South property of SE Saskatchewan. The well, which Colonia operates and holds a 37.5% working interest, was rig released on January 7th, 2008 and came on regular production last week at rates in excess of 200 barrels of oil per day. Expectations are that that production will stabilize after the initial flush period at or above 150 barrels of oil per day. A 200m pipeline tie-in to Colonia's oil battery will be completed this week.
The Company exited 2007 producing 112 BOE/d with 73% of this production being 40 degrees API sweet crude, and the balance being related high heat content solution gas and NGLs.
The Company completed the construction of storage, treating and salt water disposal facilities at its Florence South field in the latter part of 2007. These projects have enabled the Company to conserve the area's solution gas, maintain better control over oil production activities and minimize operating costs. Plans for the Florence South property include the drilling of one additional 37.5% working interest horizontal well immediately and an additional well by April, 2008.
Current strong oil prices, together with royalty obligations averaging 20% and operating costs under $5.00 per BOE combine to provide Colonia with corporate average netbacks exceeding $50.00 per BOE. The Company's balance sheet, available lines of credit and 2008 cash flow will permit an aggressive capital program in the current year without the need for near term equity offerings.
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