Reece Energy Exploration Corp. reported that the following operations update on its fourth quarter, 2007 drilling program as a follow up to its press release dated November 14, 2007. During the quarter, Reece and its partners drilled 16 (9.2 net) wells. Of these wells, 13 (6.7 net) are on production, 2 (2 net) are undergoing further evaluation and one (0.5 net) is planned either for abandonment or conversion to disposal.
With its successful horizontal oil well into the Viking sand in the Dodsland area, Reece was the first company to utilize modern horizontal drilling and fracturing techniques into the Viking formation in the Kindersley area. This well was drilled in a similar fashion to the horizontal wells currently being drilled into the Bakken formation in south-eastern Saskatchewan. The well was completed and put on production in early January and is currently producing at a rate of approximately 70 bbl/d of 36 degrees API light oil.
Reece will be following the success of this well with 2 (net 2) additional development horizontal wells on its existing land before the end of the second quarter. Depending on the success of these wells, Reece anticipates further drilling in the area before the end of 2008. Reece has room to drill an additional 11 (11 net) follow-up horizontal development wells on its existing land in the area.
Reece drilled 3 (3 net) gas wells in the Greenan area. The first well drilled showed very positive initial test rates, and has since been tied in and brought on production. The well is now producing steadily at 300 Mcf/d (50 BOE/d). The other two wells encountered higher than expected water cuts and are awaiting further evaluation.
Reece drilled a step-out well from its best producing gas well in the Brock field. The Viking formation was encountered structurally lower than expected and Reece does not anticipate this well being put on production.
Reece drilled 9 (4.5 net) infill gas wells in the North Dodsland field. All of these wells were successful and have since been tied in and put on production. These wells were part of an on-going reduced spacing project in the North Dodsland field. The success of these wells has added approximately 500 Mcf/d (83 BOE/d) net production to Reece.
As part of its annual compensation and retention program, Reece has granted and reserved for issuance, pursuant to its stock option plan, a total of 590,000 options to certain directors, officers, consultants and employees. All of the options will vest in one year except for those options granted to the directors, which will vest immediately. All of the options will entitle the holder to acquire common shares of Reece at $0.90 per share for a period of 3 years.
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