Pinnacle Gas Resources, Inc. has provided an operational update on its Powder River Basin and Green River Basin activity.
Operational highlights include:
Record Production and Well Completions
Pinnacle announced that the Company reached a record sustained net production rate of 14.0 million cubic feet of natural gas per day in September 2008, up from 10.7 million cubic feet of natural gas per day during the first half of 2008. In addition, Pinnacle continues to execute its drilling and completion plan.
"We are pleased with our continued production growth which we believe will lead to continued increasing production levels for the balance of 2008 and into 2009," said Peter Schoonmaker, Pinnacle's President and Chief Executive Officer. "We continue to make meaningful advances in our drilling, completion and hook-up processes which have helped improve efficiencies and reduce the time it takes us to reach initial well production."
In addition to its increasing production, Pinnacle continues to accelerate new well completions. Year-to-date, Pinnacle has placed 123 wells on-line during 2008, another company record, all of which have been completed in multiple coal target zones. Moreover, Pinnacle's well efficiencies continue to improve. Pinnacle has reduced the average time from drilling a well to placing a well on-line to 25 days, from an average of 60 days in 2007.
"We expect that Pinnacle's drilling and completion time will likely create efficiencies that could positively impact our bottom-line in coming quarters," Schoonmaker added. "We continue to improve our skills on multi-coal zone completions, adding not only to overall production but also reducing overall operating costs. As we continue to develop our large leasehold position, we will also work on further efficiency improvements to reach our $3.00 per Mcf unit operating cost goal. The operating cost efficiencies along with our increased production improve our ability to fund future development plans."
Pinnacle is on schedule to hook-up wells drilled in all of its key operating areas including 119 wells in the Cabin Creek (Wyoming) development, 20 wells in the Kirby/Deer Creek (Montana) development, and seven wells in the Recluse (Wyoming) development during 2008. In addition, with the recent success in recompletions in Montana and Cabin Creek, Pinnacle has expanded its recompletion program to another 36 wells in Montana and Cabin Creek in 2008.
Cabin Creek (Wyoming) Development Continues to Grow
Phase V of Pinnacle's federal plan of development in its Cabin Creek development received final approval on September 22, 2008. The approval of Phase V in our Cabin Creek Development is a major component of our development plans for the balance of 2008 and into 2009," added Schoonmaker. "This region has significant infrastructure in place, which we anticipate will allow us to accelerate our completion and hook-up process and further reduce time from spud to sales."
Green River Basin -- Mesaverde Joint Venture
Pinnacle has entered into a Joint Venture with a private oil and gas exploration company to fully evaluate and exploit its significant leasehold position in the Green River Basin. Basic terms of the venture require two wells be drilled and completed in 2009, with two additional wells in 2010, to fully test the Mesaverde Formation. The terms of the joint venture provide for Pinnacle to be carried for 100% of all costs and risks associated with the evaluation phase of the project, while maintaining an operating working and net revenue interest.
"Pinnacle's joint venture creates an opportunity for us to benefit from conventional gas exploration without committing any capital and resources to this exploration program," said Schoonmaker. "We are excited about the level of operating and geologic expertise that our partners will bring to these assets. Independent reservoir engineers have estimated that the Mesaverde Formation should be capable of recovering 2-8 BCFG on 160 acre spacing."
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