Brigham's exploration and development efforts in the Vicksburg trend have been focused in its Diablo Project located in Brooks County in South Texas. At midyear 2003 Brigham had an inventory of approximately 179 square miles of 3-D seismic data and approximately 8,000 acres of leasehold in this area. Brigham initially retained a 34% working interest in its Diablo Project, with a major integrated oil company participant owning the remaining 66%. Since 1999 Brigham has drilled three separate fault blocks in its Diablo Project, discovering the Home Run Field in 1999, the Triple Crown Field in 2001, and the Floyd Fault Block Field in late 2002. As a result of these field discoveries Brigham has completed 15 wells in 15 recent attempts.
Brigham recently executed two joint venture agreements covering approximately 5,150 additional acres of existing leasehold, located adjacent to the approximately 8,000 acres of leasehold within Brigham's Diablo Project. Brigham will operate all drilling and completion operations under both of the new joint ventures with working interests ranging from 50% to 100%. Brigham's major integrated oil company participant will retain carried, reversionary or ground floor working interests in any wells drilled as part of the joint ventures.
Floyd South Joint Venture - As part of Brigham's accelerated drilling program, next week the Company will commence its first well within the new joint ventures in the Floyd South Fault Block. The Floyd South fault block is adjacent and directly south of Brigham's Floyd Fault Block Field, discovered by the Company in late 2002. Brigham will pay 100% of the costs before casing point in the initial well in Floyd South, for a 50% working interest after casing point. Brigham will retain a 50% working interest before and after casing point on all subsequent wells in the Floyd South joint venture.
Diablo East and Diablo South Joint Ventures - Brigham expects to test two additional adjacent high reserve potential fault blocks located within the new joint ventures in early 2004. Brigham will retain 100% working interests in the initial wells drilled in each fault block, subject to a 33% back in interest after payout. After payout of the initial wells, Brigham will retain a 66% working interest in any subsequent wells drilled within a 240 acre unit around the initial wells. Wells that subsequently establish new 240 acre units will be drilled under the same farmout terms.
Bud Brigham, the Company's Chairman, CEO and President, stated, "We're very excited about the expansion of our mutually beneficial joint venture relationship with our major integrated oil company participant in the Vicksburg play. The new agreements provide us with additional acreage, control of all drilling and completion operations, and larger working interests generally ranging from 50% to 67%, but occasionally as high as 100%. Next week we will commence the drilling of the Floyd South test, located immediately south and we believe juxtaposed to our recent Floyd Fault Block Field discovery. Early in 2004 we expect to test at least two additional fault blocks, all of which provide the potential for significant reserve additions for our shareholders."
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