Reese Energy's Growth Reflected in Active 2008 Drilling Campaign
Reece has provided the following operations update through the end of the fourth quarter of 2008.
During the last quarter of 2008 Reece and its partners drilled 33 (18.37 net) wells which brings the total for the year up to 62 (42.2 net) wells drilled. All of the wells drilled in the 2008 fourth quarter have been cased and are either on production or in various stages of testing or completion. Reece's average production increased to 1,880 BOE/d, which equates to an increase of 998 BOE/d or 113.2% over the 2007 fourth quarter. Year end exit production was affected by extremely cold weather which persisted through the first two weeks of January, 2009. Since that time, milder weather, workovers and new well start-ups all combined to push Reece's current production above 2,100 BOE/d. Additional production will be realized over the coming weeks as the solution gas from the Dodsland area is tied in and new well start ups are completed.
In addition to the drilling activity described above, Reece acquired more land in its Lower Shaunavon play in south western Saskatchewan. Reece also purchased a flow-line and upgraded facilities to process and market solution gas from the 8-34 Dodsland Viking light oil battery. During the quarter Reece also acquired additional land and a battery in conjunction with its Bemersyde Bakken light oil play.
In the fourth quarter, growth at Reece's Viking play in west central Saskatchewan continued with seven (7.0 net) extended reach, multi-stage fractured horizontal wells drilled. Three of the seven wells were on production by the end of the year; three of the others have since been brought on production and the last is expected to commence in the coming days. During the quarter Reece purchased a flow-line and upgraded its Dodsland facilities in order to market solution gas from its Viking oil wells. Reece is expecting to process over one million cubic feet per day of solution gas through this facility.
During the Quarter, Reece, with its partner at its North Dodsland field in west central Saskatchewan, drilled 16 (8 net) vertical gas wells. The wells are in various stages of completion or production and are expected to be fully on stream before the end of February. It is anticipated that when all wells are fully on production they should contribute a total of over 2 million cubic feet per day (1 million net) of sales.
Reece drilled one (1.0 net) vertical Manville gas well at its Buffalo Coulee play in December. This well was completed and tested in early February. It is anticipated that this well will be tied in and producing before break up at rates of around 500 mcf per day.
Stoughton and Forget Bakken
During the fourth quarter of 2008, Reece participated in the drilling of six (1.0 net) horizontal oil wells in the Bakken formation. Four (0.65 net) wells were drilled in the Forget area with its partner Crescent Point, while the other two (0.34 net) were drilled in the Stoughton area with its partner Renegade.
In conjunction with its partner at Bemersyde, Reece purchased 1,600 (800 net) acres of fee title land and an additional 320 (160 net) acres of Crown land. This new land comes complete with an oil battery and water disposal well. This facility will be utilized as the area is developed. This purchase also includes shut in Red River production. The further development of the Bakken and reactivation of the Red River wells will be pursued as time and resources allow. Reece intends to use the newly acquired facility as a hub in the development of the area.
Reece drilled and completed its first (0.68 net) Lower Shaunavon well at Rapdan in south west Saskatchewan. The well is an extended reach, multi-stage fractured horizontal well. The well has been producing at an un-optimized rate of 40 to 60 bbls of medium gravity oil per day (net 27 to 40 bbls). At the provincial land sale held on October 6, 2008 Reece was successful in acquiring 12 sections jointly with Anterra (50%/50%), and an additional 23 sections of land (100%) for a total of 22,400 (18,600 net) acres of exploratory land in the area.