Petro Resources Corporation reported its minimum capital budget for 2008 will total $21.3 Million and allow the company to participate in approximately 47 new wells during the year. The Company intends to finance its 2008 capital budget from cash on hand, cash flow from operations and its existing credit facility.
The Company has budgeted $13.0 Million, or 61% of its overall capital budget to the Williston Basin in North Dakota, where the Company has a 43% average working interest in 15 producing fields that are all candidates for water injection re-pressurization secondary oil recovery. The Company also has several exploration projects in addition to the enhanced recovery fields.
Of the total budget for North Dakota, approximately 71% or $9.3 Million will be spent on development efforts. Scheduled projects include converting an existing well in the Mohall field into a water injection well during the second quarter and drilling two new horizontal producing wells in the third and fourth quarters. In the East Flaxton field, the Company will drill one new horizontal well and convert one existing well into a water injection well in the first quarter. Additionally, the Company will begin re-pressurization operations on several fields including the Glenburn field by converting an existing well into a water injection well and in the Woburn field where the Company will centralize tank batteries, convert several existing wells into water injection wells and drill several water source wells. The Company expects to unitize five fields for re-pressurization during in 2008.
The remaining $3.7 Million of capital targeted for North Dakota will be spent on exploration including drilling the Newporte prospect. This prospect, first discovered in the 1970s, had six wells drilled on it by a major oil company. Of the six, four were completed and produced until the field was abandoned due to stimulation problems. In 1995, production was re-established by re-completion in two of the original wells. Oil production continued for less than 12 months until being shut-in due to casing failure.
The Company and its partners completed a 3-D seismic shoot over the Newporte prospect area during the fourth quarter of 2007. From that data the Company has identified more than ten potential locations in various horizons. One well will be drilled to approximately 10,000 feet to test the Deadwood Sandstone formation which was the productive zone in the earlier wells and one well will be drilled to test the Nesson formation at approximately 5,500 feet. A rig is scheduled to be on location late in the first quarter of this year to begin drilling the first well.
The Company has budgeted $2.1 Million for continued drilling operations in the Permian Basin where it has a 10% working interest in the Cinco Terry prospect. As previously announced the Company will participate in at least 24 wells in this field during the year and continues to see very favorable drilling results.
Mr. Don Kirkendall, President of Petro Resources, said, "We are extremely pleased with the progress this company has made in a very short period of time. In approximately two years we have been able to assemble working interests in a diverse set of both onshore and offshore assets that we believe provide us with significant upside potential to both natural gas and crude oil with minimum risks." Mr. Kirkendall went on to say, "This year's capital spending will be an opportunity to demonstrate our ability to grow production, reserves and cash flow through drilling rather than through acquisitions."
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