MegaWest Energy Corp. has announced that first oil sales from its Marmaton River Project in Missouri occurred on August 4, 2008.
MegaWest's experienced team of enhanced oil recovery specialists has established sufficient production from the Upper Warner sandstone at the Marmaton River Project to commence oil sales. The reservoir is responding to the injection of steam (announced March 25, 2008) as predicted and oil production has started to ramp up towards the target rate of 400 to 500 barrels per day. It is expected that this rate will be achieved before year end. Drilling of the second phase of wells at the Marmaton River Project has been approved and should commence in the third calendar quarter. This will ensure sustained production capacity at this project. The oil from this project is trucked to a receiving terminal for the nearby Coffeyville, Kansas refinery. MegaWest expects to receive field-gate pricing of between 75% and 80% of posted West Texas Intermediate (WTI) price.
Construction of the second project in this area at Grassy Creek (announced June 26, 2008) is proceeding on schedule and on budget. Steam injection should commence at Grassy Creek early in the fourth quarter with a production response expected similar to the Marmaton River Project. These two projects will give MegaWest 1000 barrels per day of production capacity with project lives on the order of 20 years.
MegaWest continues to build its inventory of lands with potential for commercial development and now holds 100% working interest on over 15,000 acres of leases in this area. MegaWest has also initiated application and pre-ordering of equipment for a third project in Missouri to be constructed as soon as the Grassy Creek construction and Marmaton River expansion projects are complete. MegaWest intends to continue this aggressive development plan to build additional projects over the next 4 to 6 years until production reaches an optimum level of 6,000 to 8,000 barrels per day.
MegaWest is continuing to aggressively execute its business plan to add shareholder value. MegaWest's experienced management seeks to prove up significant resources and achieve early production from its world-class suite of operated heavy oil properties. MegaWest owns or has the right to earn an interest in over 125,000 acres in Missouri, Kansas, Kentucky, Montana and Texas. MegaWest's strategy for growth is underpinned by three converging market factors; the need for security of energy supply in North America, the current high world oil price, and the new technical developments in commercial thermal recovery of heavy oil. MegaWest plans to establish proven and producing unconventional heavy oil reserves in each of its core areas through delineation drilling and the completion of enhanced recovery production projects.
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