Morumbi anticipates that with the recent receipt of a crown surface lease and approval of its well license for a new vertical well at 12-33-65-22W5M, drilling operations will begin within the next week once the surface lease construction activities have been completed. The well should take approximately 7 days to drill and the Company should have initial testing results by early March 2010. Given the strong performance of offset oil wells in the McKinley Cadotte Pool, the Company is anticipating that the new well should make a strong contribution to future production and cash flow if successful.
Offsetting wells in the Cadotte pool have produced over 1.5 billion barrels of 37 degree API oil, averaging 300,000 barrels per well.
Morumbi has also recently concluded the successful re-completion of the original 12-33 horizontal well. The operation involved abandoning the horizontal portion of the well bore that was believed to have collapsed. This operation was necessary in order to enable Morumbi to apply to drill a new vertical well at 12-33 which we anticipate will be more optimally placed to capture the remaining reserves in the McKinley light oil pool. This view is supported by horizontal logs that penetrated the Cadotte Reservoir at the proposed New 12-33 vertical location.
The re-completion also will enable Morumbi to use the vertical portion of the original 12-33 well, which has a surface location at 4-33, as a potential water disposal well and for pressure maintenance purposes in order to receive GPP on the new 12-33 well if successful.
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