Oiltec participated in the drilling of two wells at Redwater during the second quarter, resulting in one new-pool oil well (50% Oiltec) and one service well for water disposal (37.5% Oiltec). The multi-zone oil and natural gas potential realized in the discovery well exceeded expectations, thereby warranting an expanded drilling program of 11 wells during 2003. Seven wells have been drilled to-date (30% - 65% Oiltec), resulting in four producing oil wells, two shut-in natural gas wells and the one service well. Initial average production of the oil wells exceeds 100 b/d per well. One horizontal oil well is scheduled for immediate drilling, followed by three more vertical wells.
The Talisman-operated d-50-C/93-P-5 well has reached a total depth of 5,544 meters. Completion and testing operations to-date suggest that the d-50-C well may be marginally economic. The well was flowed on an extended rate test; build-up data will not be available for several weeks and will determine if the well will be tied in for production. Oiltec paid 18.18% of the drilling costs to earn a 10% interest in the well and more than 15 additional sections of deep mineral rights. The Company now has a 10% interest in 32,400 acres (50 sections) and a 15% interest in 11,800 acres (18 sections) of deep mineral rights at Sukunka. Oiltec has elected not to participate in the second earning well at Sukunka that was spud late last week. A development program on joint lands is expected to commence in 2004 on trend with the b-79-J new pool discovery well (10% Oiltec) drilled in 2002, 11 kilometers south of the d-50-C location.
A five-well drilling program at Laprise (40% Oiltec) commenced in August. Baldonnel natural gas is the primary target for four of the wells, while the fifth well will test a shallower Bluesky natural gas target. The first well has been drilled and cased as a potential Baldonnel gas well with completion and testing operations to begin in early October. Initial production from successful wells is anticipated before year-end.
Oiltec commenced drilling operations on its Windsor exploratory oil test (91% Oiltec) on September 18th. The well did not encounter an oil bearing reservoir and will be abandoned.
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