Great Plains Maintains Momentum on Winter Drilling Plans
Great Plains Exploration has provided a brief progress report on its winter capital program and drilling plans for the first half of 2009. In response to current and forecast commodity prices, the Company has scaled back its spending plans and has chosen to focus solely on projects that provide opportunity for material production growth.
In Northeast BC, Great Plains has drilled or is drilling three exploratory tests at Klua, Gunnel and Helmet plus a series of workover and
recompletion projects designed to increase throughput at the Company's 100% owned Klua facility. The Klua well which targeted Keg River gas was drilled and cased in late December but did not encounter the expected dolomitic porosity; however, a number of interesting intervals with lower porosity were encountered and a completion and evaluation program is expected to commence at the beginning of March. Additionally, there appears to be uphole potential in the Debolt formation. A pipeline license has been obtained to tie this well into the Klua gas plant. Great Plains operates and will retain a 75% interest after paying 50% of the costs of drilling, completing and tie-in of the Klua well.
At Gunnel, a 100% exploratory test has been drilled, cased and completed as a potential Debolt gas well. Initial completion results are encouraging and pressure testing and evaluation is ongoing. The well tested at a rate of approximately 20 e3m3/d (710 mcf/d), with further stimulation expected to improve this preliminary rate. A pipeline license has been acquired for the Gunnel well which would allow tie-in this winter season pending final test results.
Great Plains has commenced drilling operations at Helmet to drill a well analogous to an existing Great Plains gas well currently producing from the Debolt formation at approximately 2 MMcf/d. This new well is targeting 2 to 3 bcf of gas with Great Plains operating and holding a 50% working interest. Pending a successful completion, this well will require a 100 metre tie-in to existing infrastructure which would allow for the commencement of production before break up.
The Great Plains technical team has identified three to five potential follow-up locations at Helmet which could be drilled in winter 2009-2010 subject to commodity prices and capital availability.
In Northeast BC generally, the Great Plains technical team will continue to focus on assembling and refining a multi-year prospect inventory supported by an extensive seismic database. The Company's area land base totals approximately 50,000 acres plus an additional 370,000 acre block in which Great Plains has the exclusive right to explore over a four year period. In the Greater Pembina area, Great Plains continues to actively pursue the evaluation and extension of the Nisku oil fairway. The Company will participate in a total of three wells which are currently licensed with a fourth license expected within the next month. A fifth license application for a location at 14-35-5-6 W5M (46% W.I.) will go to a hearing process commencing in April with potential for a ruling by summer 2009.
Of the wells which are currently licensed, Great Plains is participating at 40% working interest in an exploratory test which has commenced drilling at 14-33-50-5 W5M. A successful outcome at this location would allow for the construction of a pipeline to produce not only the 14-33 well, but behind pipe volumes from a previously announced discovery (see press release dated January 23, 2008) at 11-12-51-5 W5M which tested at 1,400 BOPD (26%-40% W.I.).
The remaining two current Nisku licenses are in the Tomahawk area at 1-16-51-6 W5M (25% W.I.) and 9-17-51-6 W5M (25% W.I.). The 1-16 test involves deepening a well drilled by Great Plains and its partners two years ago which had not been drilled to the Nisku due to licensing issues. This operation is expected to commence in July and will require very little capital given the amount already spent on the well to-date. A successful outcome at 1-16 will set up the 9-17 location as well as provide sufficient reserves for pipeline construction. This in turn would allow for the tie-in of shut-in volumes from existing discoveries at 15-7-51-6 W5M (35% W.I.) which tested at 650 BOPD and
8-35-50-7 W5M (32.5% W.I.) which tested at 400 BOPD.
Great Plains and its partner are expecting a license to be granted immediately for the drilling of a new pool test in Crossfire, approximately
2.5 km south-east of the Q2/08 Nisku oil discovery at 9-1-50-5 W5M. Based on a proposed pooling agreement, Great Plains expects to participate at a 15% working interest in this test which if successful, may lead to at least one additional location. The 9-1 well which had produced since September at average rates in excess of 2,000 BOEPD (17.5% W.I.) was shut-in at the end of 2008 for a bottom hole pressure survey and remains shut-in, pending analysis of pressure data and testing and evaluation of a potential injection well at 3-1-50-5 W5M, which is currently being completed by Great Plains and its partners. Net production to Great Plains from the 9-1 well is approximately 400 BOEPD. Subject to the results of the foregoing operations and regulatory approval, production may resume as early as April.
Great Plains production averaged approximately 1,975 BOEPD through Q4 with December and January volumes negatively impacted by extreme weather conditions in Northeast BC and mechanical breakdowns at Randell. Production volumes for early February averaged 1,590 BOEPD which reflects the current shut-in of the 9-1 well at Crossfire and the temporary curtailment of approximately 100 BOEPD at Klua, due to line pressure problems for one well which are expected to be resolved in April or May.
While industry conditions require substantial reductions in capital spending, Great Plains remains confident in its ability to execute the
aforementioned projects and their potential for material production additions. The Company's credit facilities are drawn by approximately $22 million against available lines of $38 million. Subject to the potentially material results of wells currently drilled or planned and expected commodity pricing, the Company expects to review its capital program for the balance of 2009 in April.
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