North Peace announced operational and financial updates for 2009.
The second cycle of the L1 well has now been on production for 21 weeks. The cycle's Steam-to-oil Ratio ("SOR"), which continues to decrease as production is maintained, is now approximately 4.4. This represents a 45% improvement over the initial cycle. For comparison purposes, our SOR when adjusted for heat content of injected steam equates to a Steam Assisted Gravity Drainage ("SAGD") SOR of 3.7. This adjusted SOR is now equivalent to the current industry average of 3.7 for existing SAGD projects in commercial operations. The production rate to date for the cycle is 29 bbl/d over a period of 26 weeks which includes both steam injection time and production time.
The revised steam injection strategy on the L1 well is accessing the resource more efficiently and is resulting in significantly improved SOR's. The next cycle will utilize the same strategy with a larger steam slug. The purpose of this next cycle is to demonstrate repeatability but also has the potential for further improved SOR's and increased daily oil rates.
The L2 well was on production for six months and is now shut-in for a pump change. Prior to the pump change the well will be converted to steam circulation to gather additional injection and production data which will help to determine the steaming strategy for this well's second cycle.
2009 Operating Milestones
2009 Financial Highlights
Louis Dufresne, President of North Peace, commented, "During 2009, we made very significant strides in the development of our project. We completed construction of the pilot facilities, initiated operations and achieved the very significant milestone of first oil in May. Most importantly, we have advanced our understanding of the resource and modified our steaming strategy to the point where we have already achieved a commercial SOR on our L1 well. This accomplishment reached so early in our piloting efforts is remarkable and provides the confidence to continue with our development plan, unlocking the significant value of our Red Earth assets."
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