Grey Wolf Exploration reported that January 2009 production levels averaged over 2,400 barrels of oil equivalent per day ("boe/d"), an increase of 14 percent over the first quarter of 2008. The increase in January production is attributable to satisfactory performance on the first two (1.5 net) horizontal wells in the Pouce Coupe Montney/Doig play. Continuing geological and engineering review of the company's lands show approximately 50 additional horizontal locations, net to Grey Wolf, in the area.
Grey Wolf is also pleased to report first production from its Petitot core area in northwest Alberta where we hold over 54,000 acres of 100 percent owned lands, of which approximately 20,000 acres are now covered with 3D seismic. The Petitot 2-17 was placed on production February 20 at an initial rate of approximately 5 million cubic feet per day ("MMcf/d") raw gas (700 boe/d sales gas) from the Slave Point formation at approximately 2,000 meters in depth. Plans are to monitor production over time and if warranted, and if processing capacity becomes available, gradually increase production. This new production includes a certain amount of flush production that we expect will decline over time. Current Grey Wolf production is over 3,100 boe/d.
Current production levels are at, or close to, the company's full firm gas processing capacity in both of our core areas. Plans are in place to increase our firm capacity and our excellent inventory of lower risk drilling locations allows Grey Wolf to meet such increases. In this context, it should be noted that, like many other operators, Grey Wolf is in no rush to drill in current economic conditions. The company's business plan is in place and it is working to increase production with prudent, timely investment of cash flow, and to make provision for the reduction in debt.
In response to a letter received from a shareholder regarding concerns with the corporate business plan, Bob Watson, Chairman and Chief Executive Officer stated, "In the current economic climate, it is unusual to find a junior oil and gas company that has significantly increased production through drilling in the past 12 months. We feel this validates our business plan that is designed to build production and pay down debt within the limits of current cash flow. That being said, our Board of Directors has evaluated, and continues to actively evaluate opportunities to maximize shareholder value."
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