Zapata Energy has provided the following operations update.
Zapata's 2008 capital program of $33.1 million resulted in Zapata adding 1.2 million boe of reserves, more than replacing its 2008 production. In 2008, $19.4 million was spent on drilling 27 (17.9 net) wells resulting in 12 (6.9 net) gas wells, seven (6.5 net) oil wells, one net abandoned well, two (2 net) standing wells and five (1.5 net) wells in progress at year end. The wells in progress at year end included Zapata's 100% owned deep test in the Gold Creek area.
In the first quarter, Zapata completed the drilling of its deep test well. Completion commenced prior to break up and flow tested natural gas from the two lowest zones of the well. Road bans forced the testing to be interrupted and delayed until summer. The Corporation is encouraged by the test results and evaluation of these zones will continue after breakup when access is allowed and when natural gas prices improve. In addition, several significant indications of gas in shallower zones will require testing.
Fourth quarter 2008 sales of 2,974 boe/d increased 2% over sales reported in the same period of 2007. The average sales price achieved in the fourth quarter of 2008 was $51.89 per boe as compared to $51.04 in the fourth quarter of 2007.
Zapata's proposed capital budget for 2009 has currently been set at $14.0 million, which is expected to be financed entirely from cash flow. Although the Corporation has additional projects planned, this budget will allow the Corporation to operate appropriately within the current commodity pricing environment. Zapata's efforts over the balance of the year will focus on the drilling of oil projects in its East Central Alberta area and expansion of its successful Silver area waterflood.
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