Connacher Oil and Gas Limited reported that its daily bitumen production rate at its Great Divide Pod One steam-assisted gravity drainage ("SAGD") project has been ramping up and has now surpassed 5,000 bbl/d. When combined with recent average daily conventional production levels, Connacher is now producing approximately 7,500 boe/d of bitumen, crude oil and natural gas. This is approximately triple the company's production level during 2007.
Further increases are anticipated, as the Pod One ramp up continues during upcoming months towards the project's design level of 10,000 bbl/d and in the short run, as new Marten Creek/Randall natural gas volumes of approximately 1,000 boe/d are brought onstream as anticipated during March 2008. The company is delighted with the production ramp-up seen at Great Divide and also with the ongoing production optimization program on its conventional oil and gas properties.
Readers are cautioned that all references to barrel of oil equivalent ("boe") are calculated on the basis of 6 mcf:1 bbl. Readers are also cautioned that the conversion used in calculating barrels of oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Furthermore, boes may be misleading if used in isolation.
At Great Divide Pod One, Connacher's SAGD project continues to exceed expectations, as production builds throughout 2008 towards the project design of 10,000 bbl/d of bitumen. Currently, 12 well pairs out of 15 well pairs have been converted ("flipped over") to SAGD production, including several in recent days. This would likely have occurred earlier in the month except for brutal winter weather conditions in late January and early February 2008, leading to the decision to delay the conversion of additional wells until more normal conditions prevailed. It should be noted our dedicated operating staff at Pod One were able to keep the facility operating during this period, when other oil sands operations shut down.
The company's cumulative bitumen production, which has primarily occurred in the past seven weeks since steam injection commenced, now totals over 140,000 barrels. Performance indicators including temperatures, pressures, steam oil ratios and individual well productivities continue to meet or exceed our targets at this stage of production.
Connacher's facility and its operating and marketing staff has been handling the increased bitumen production and the subsequent sale of both raw bitumen and diluted bitumen ("dilbit"). Connacher continues to truck its bitumen and dilbit to various sales points and has been pleased with the pricing and indicated netbacks available from the various market alternatives it is accessing. Specific pricing is not being disclosed at this time for competitive reasons.
Our conventional oil and gas production has recently exceeded 2,600 boe/d. The anticipated March 2008 startup of our new Randall gas plant and sales line, in the Marten Creek area, is expected to add another 1,000 boe/d to Connacher's conventional and overall production base.
First quarter drilling operations have been very successful. Connacher has drilled 18 gross (15 net) wells and is just completing the drilling of its nineteenth and last well in its first quarter 2008 conventional program. Results have been excellent; the company has cased for completion 16 gross wells of the 18 gross wells drilled. Subject to planned completions being successful, 13 of the 16 completed wells should be placed on production this year. Cased wells include eight (7.5 net) development natural gas wells, four (3 net) exploratory or outpost natural gas wells, two (one net) exploratory oil wells, one (one net) development oil well and one (one net) water disposal well.
At Great Divide, Connacher is currently on well 92 of its 120-well oil sands delineation and core hole well program. This program is designed to identify additional reserves and resources, primarily on our main lease block at Great Divide. The company has increased its rig complement from six to ten drilling rigs in this program to ensure timely completion before March 31, 2008. Results of the program will be evaluated and interpreted over the next several months; the company is encouraged by the results to date. Connacher's seismic delineation and exploration program for 2008 is also nearing completion and this data will be integrated with results of our core hole program.
The company's Algar application is proceeding in a normal course manner through the regulatory process. Subject to the timing of regulatory approval, Connacher is ready to commence its construction and drilling program this summer. As previously reported, the financing for the construction of the Algar facilities and related wells has already been arranged.
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