Galleon Energy Inc. has announced continued drilling and operational successes.
In 2008, Galleon intends to pursue production and reserves growth with drilling projects targeting Montney resource gas and light oil. Two to three rigs are planned to be constantly active on Montney projects during Q3 2008. All Montney horizontals are expected to be completed with multistage fractures. Galleon's 2008 program targets projects that can provide repeatability, predictability and size.
Galleon has initiated an aggressive Montney horizontal drilling program at Dawson, Alberta. To date, five Montney horizontal wells have been drilled and completed with multistage fractures.
In June 2008, three horizontal wells were drilled confirming the size of the fairway which extends over a distance of 25 km. The 3 wells tested approximately 600 Boe/d, in aggregate, of natural gas and NGLs over a period of 48 hours. The natural gas wells are liquids rich with NGL production tests of between 40 and 60 Bbls per Mmcf. The on stream production rate for each of these wells has yet to be determined.
In July 2008, the fifth horizontal well in the Eastern Montney program was drilled and tested at a rate of approximately 2.9 Mmcf/d with NGLs of 100 Bbl/d over a test period of 72 hours. The on stream production rate for this well has yet to be determined.
Due to the success of the Eastern Montney horizontal program, Galleon plans to expand the number of horizontal wells to be drilled in this fairway in 2008 from 10 to up to 24 gross wells. Galleon has access to approximately 313,000 gross acres of land in the Eastern Montney region.
Galleon is committed to growing its Montney presence in the Central Montney region and in 2008 at least 5 new Montney resource plays will be tested.
Three Montney vertical wells were successfully drilled on new Montney fairways in June 2008. One well has been completed and two wells are waiting on a service rig. Test results on the completed well showed a stabilized rate of 0.9 Mmcf/d at a 35% draw down over a testing period of 48 hours. The production rate has yet to be determined.
In July 2008, two Central Montney horizontal wells (100% interest) were drilled and cased for production. Both wells showed Montney gas on mud logs throughout the horizontal leg. One of these horizontal wells has been completed with testing results of approximately 600 Boe/d over a period of 48 hours. The production rate for this well has yet to be determined. The second well is awaiting completion operations. Two Central Montney vertical wells were also drilled and cased for production in July 2008.
At least one additional Montney horizontal well and two exploration vertical wells are planned for the Central Montney region in Q3 2008. Galleon has access to over 193,000 gross acres of land in the Central Montney fairway.
Galleon has access to over 40,000 gross acres of lands with Montney potential in BC and western Alberta. The majority of these lands are located close to Septimus and Parkland, BC. Galleon believes in the resource potential of this Montney fairway and plans to test at least 4 Montney plays in this region in Q3 2008.
No wells were drilled in the BC Montney region in Q2 2008. Two Montney horizontal wells identified on two different trends are planned in Q3 2008, one of which is currently being drilled. One Montney vertical well (0.5 net) was drilled and cased for production in July 2008. At least two vertical wells are also planned to be drilled in Q3 2008. Contingent locations are being surveyed in order to be ready to proceed pending successful results from the wells drilled in third quarter 2008.
The continued strength of Galleon's light oil portfolio was seen with the drilling of 2 successful Devonian light oil wells at Kimiwan/McLeans Creek, Alberta in June 2008. Both wells have been completed and are currently being production tested. Three additional wells targeting Devonian light oil were drilled and cased for production in July 2008. Two wells are currently drilling potential light oil targets. Up to 11 additional light oil wells are planned for Q3 2008.
Second quarter 2008 production is expected to average approximately 16,100 to 16,500 Boe/d based on field report estimates.
Current production is in excess of 18,500 Boe/d based on field report estimates. Exit 2008 production is targeted to exceed 23,000 Boe/d. In the second half of 2008, Galleon plans to drill between 72 and 80 wells. The drilling program is focused on natural gas and oil.
Galleon's 2008 capital program has been increased by $50 million to approximately $280 million due to the success of the Montney horizontal drilling program and new exploration oil and natural gas discoveries. The expanded capital program is expected to be funded by cash flow. The expansion of this program will focus on delineating new Montney pools with outpost drilling and on construction of two new natural gas facilities to be located in Dawson and Kakut, Alberta.
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