"This reserve-based financing provides a low-cost option for Ivanhoe to fund the expansion and will provide a further boost to the already improved production profile from South Midway," said David Martin, Ivanhoe Chairman.
This drilling program is designed to extend the Midway-Sunset field to the south, where Ivanhoe has an acreage position covering the entire planned expansion area. Once completed, this development phase could more than double Ivanhoe's current daily production volumes from the field. To date, five new wells have been drilled and steaming operations have been applied. Depending on results from this drilling program, subsequent phases of development are planned that could result in up to 40 additional wells being drilled and extending the field even further to the south.
The Company is currently producing approximately 500 gross barrels per day from 38 wells in South Midway-Sunset. During 2002, production volumes increased from approximately 300 barrels per day to a peak rate of 600 barrels per day following the application of a steam-injection program to improve heavy-oil production from the wells. In addition to drilling new wells, Ivanhoe is evaluating the potential for production gains that may be achieved by switching to a continuous steam application process that could double the recovery expected from the current cyclic application process. Ivanhoe is the operator of these wells in South Midway Sunset, with a 100% working interest and a 93% net revenue interest.
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