Bronco Energy has announced recent significant increases in production from its Upper Wabiskaw heavy oil field at Wabasca, Alberta. The impact of higher production levels improves the financial stability of the Company during these economically challenging times.
Bronco's production team is focused on well optimization efforts and building on the recent production results outlined below:
Initial production has also commenced from Bronco's first Middle Wabiskaw horizontal well. The 103/12-25-79-23W4M well is the first known horizontal test well drilled into this zone in the Pelican Lake area. The well has been on production for approximately 17 days. Over the past week, two tests have indicated that production levels on the well are approximately 88 bopd with an oil cut of 70%.
Bronco's mapping indicates that this zone is prospective on up to 17 sections in close proximity to its battery and treating facilities. The Middle Wabiskaw zone has similar reservoir properties to that of the Upper Wabiskaw and could be developed in a similar manner, including long term enhanced oil recovery utilizing polymer waterflood.
Development of the Middle Wabiskaw would also realize capital cost efficiencies as future drilling into this zone could be accessed from existing pads and utilize existing pipeline and facilities infrastructure. Development plans for this zone are pending upon obtaining additional production history and data on the well.
Brian Alford, President and CEO of Bronco, commented, "The increases in production and Middle Wabiskaw heavy oil tests are encouraging results for Bronco. While the current economic challenges seem daunting, the Company's balance sheet and recent facilities and infrastructure enhancements are anticipated to allow for continued production growth as oil wells continue to be optimized."
Of note, the Company also advises that Alford recently disposed of a nominal portion of his Bronco shares to cover a fraction of the tax liability created by his exercise of certain options that expired in June 2008. Several other insiders purchased Bronco shares during the same time period.
Bronco also announces that it's wholly owned subsidiary, Bronco Drilling Services Ltd., has entered into a minimum 120 day contract for its telescopic double Rig#1 with a major producer to drill in the Wabasca area commencing in January 2009. This will provide additional near term working capital resources that will be available for Bronco's Wabiskaw development plans.
Bronco is continuing to evaluate its 2009 capital expenditure plans in light of the current high global market volatility, and expects to provide an update on its plans prior to year end.
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