Richards Oil & Gas Ltd. announced that with the new wells drilled and tied in at Morningside, total company production for February 2008 is estimated to be 220 boe per day.
With this increased production, reduced general and administrative costs and the current sales price for natural gas, the company has reached the milestone of generating positive cash flow on a monthly basis.
In addition, recent drilling and completion efforts on the company's Thorsby property has shown positive gas production results from both the Coalbed Methane (CBM) and the co-mingled conventional sands.
The company drilled four wells (2.4 net) in December 2007 on its Thorsby property. Flow testing of these wells, which were completed in coal and sand zones, indicates that the average production per well will be over 100 mcf per day. Pipeline design and planning is currently underway and these wells are expected to be on production in the spring of 2008.
The company has also initiated an additional six well (5.6 net) drilling and completion program to be completed before the end of March 2008 on its recently announced farm-in lands. These low-risk, low-cost new wells will be tied in to production facilities as soon as possible in the second quarter depending on the timing and duration of spring break up.
With the completion of the six new wells the company will have an earned interest in 14 sections of land with a 74% average working interest and a 30% interest in a gas sales pipeline in the Thorsby area. The company has an option to earn an additional nine sections of land contiguous to the current lands.
In Morningside, during January and early February 2008, the company tied in the six Horseshoe Canyon wells (2.4 net) that were drilled in December 2007. In addition, three wells that were producing from coals only were re-completed adding significant gas production from the co-mingled conventional sands. Production from the 15 wells in the area ranges from 60 mcf per day to over 600 mcf per day, per individual well, with an average of 110 mcf per day, per well. The development of the Morningside area is now effectively complete and Richards is very pleased with the results of this program as it is proof of the Company’s technical ability to successfully identify and develop CBM properties on the western edge of the known Horseshoe Canyon CBM fairway.
In Lacombe, the company is currently reviewing additional drilling opportunities with its partner that operates this area. The company has 18 (gross) Horseshoe Canyon wells on production, producing over 350 mcf per day net to the company.
The company has two standing wells that have flow tested at over 120 mcf/d from coal and sand zones at Crossfield. The company is evaluating alternatives to get this gas to market along with additional land opportunities.
The company has over 160 (gross) potential drilling locations at these four Horseshoe Canyon development plays. Full development of these areas would result in the potential for the company to produce approximately 10,000 mcf per day (net) on a risked basis.
The company continues to execute its plan of taking advantage of the lower cost and high availability of field services to increase production from its Horseshoe Canyon properties while continuing to prove up the large resource potential of its Ardley properties. Also, the company will continue to secure additional land interests in its operating areas based on sound economic evaluation and available opportunities.
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