Birchcliff Energy is currently drilling its third horizontal natural gas well. Birchcliff expects to drill, complete and tie-in 3 to 4 Montney/Doig horizontal natural gas wells in its 2008 winter drilling program. Birchcliff expects to drill 4-6 Montney/Doig horizontal natural gas wells in the second half of 2008 bringing the aggregate total to 10 Montney/Doig horizontal natural gas wells for 2008. Further, Birchcliff is executing the operational planning to significantly increase (beyond 6) the number of horizontal wells it could drill in the second half of 2008. The drilling of these wells will be dependent on drilling results, commodity prices, and industry conditions.
To date Birchcliff has drilled 22 (19.5 net) successful vertical wells on the Montney/Doig gas resource play. These vertical wells have proven a producing fairway where Birchcliff has accumulated 33 net sections of land. Birchcliff has previously indicated that it had a potential of drilling 60 horizontal natural gas wells, two horizontal natural gas wells per section on 30 net sections of land. Birchcliff now sees increased potential to drill 4 or more horizontal natural gas wells per section, at least doubling the number of proven potential locations.
Birchcliff continues to evaluate reservoir parameters, new advances in technology, economic variables including well costs and commodity prices to determine the optimal number of horizontal wells that should be drilled, per section, to optimize the recovery factor and production of natural gas on our land. Competitors have announced plans to drill up to 8 horizontal natural gas wells per section on this play trend.
Birchcliff has approximately 20 net sections of undeveloped land in the Pouce Coupe area where Birchcliff believes there is a high likelihood of the extension of the Montney/Doig play on these lands. This undeveloped land has had considerable offset drilling or other activity which indicates to Birchcliff that the Montney/Doig play is present. Over time, Birchcliff plans to aggressively prove up the existence of the Montney/Doig play on these lands, which represents significant upside potential to Birchcliff.
Birchcliff recently initiated its drilling program on its new Worsley light oil pool. Birchcliff expects to drill approximately 10 vertical light oil wells on the Worsley property and potentially four horizontal light oil wells during the winter drilling program. Birchcliff is actively planning and has commenced the operational activities to significantly increase the water flood program on the Worsley property. Subject to positive drilling results and commodity prices, Birchcliff expects a very active drilling program at Worsley in the second half of 2008.
In the third quarter of 2007, Birchcliff announced a significant Triassic gas discovery. This 100% working interest well is on production and is producing in excess of 4 mmcf/day (666 boe/d). Currently, Birchcliff is drilling a follow up exploration well on trend to this discovery.
Birchcliff expects to drill a number of other vertical exploration and development wells with the third rig in its winter drilling program which will target a number of potential horizons. Birchcliff continues to high grade its drilling portfolio and may increase the number of exploration wells it could drill in 2008 depending on results, commodity prices and industry conditions.
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