Thunderbird Energy announced the completion of the evaluation of its reserves. The Gordon Creek natural gas field in Utah represents most of company's proven and probable reserves and was the only asset evaluated. The evaluation was conducted by MHA Petroleum Consultants of Denver, Colorado effective January 31, 2010 and was prepared in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas activities. The Form 51-101F1, Form 51-101F2 – Report of Independent Qualified Reserves Evaluator, and Form 51-101F3 – Report of Management and Directors on Oil and Gas Disclosure have been filed with Canadian securities regulators.
The Company highlights a few very significant milestones achieved over the past year:
Reserves and Operations
The increase in the Company's reserve valuation during the past year is largely attributable to the performance of the wells during the year and the corresponding reduced operating costs. Production increases were derived entirely from optimizing operating practices in accordance with a plan developed and implemented by COO Rick Ironside and his team. The production increase also further demonstrates the validity of Thunderbird's Gordon Creek Best Practices Study which establishes Gordon Creek as a long life, low cost producer, akin to the neighboring Drunkard's Wash field.
In addition, the Company has prepared an extensive development plan and detailed cost analysis following the completion of the Gordon Creek best practices study in 2009. The combination of these efforts which were carried out in the context of current market conditions and a planned multiple well drilling program has resulted in a 30% decrease in budgeted development costs, thereby further enhancing the economics of the planned Gordon Creek development.
These production and reserve increases have been achieved without the expenditure of capital as the Company has temporarily deferred new capital expenditures in light of the current gas markets. However, the Company is in a position to move quickly to implement the planned development program as market conditions improve.
In December the Company announced two letters of intent ("LOI") which will potentially provide for the rapid development of the Gordon Creek field, subject to various conditions and approvals.
The first LOI involves Thunderbird's participation with a group called the Southwest Regional Partnership ("SWP") in its Carbon Sequestration Phase III: Deep Saline Sequestration Deployment Project to be sited at Gordon Creek. This project will be funded approximately 80% by the US. Department of Energy ("DOE") and 20% by the other participants, including Thunderbird, The University of Utah through the Utah Science Technology And Research initiative ("USTAR") and the New Mexico Tech – Petroleum Recovery Research Center. It is anticipated that the project will represent an investment in excess of Twenty Million (US $20,000,000) in wells, facilities and infrastructure to be situated at Gordon Creek. The project is currently at an advanced design stage, although final designs and participation remain subject to final DOE approvals. The first major step in the project will be to drill a deep (3650 meter) CO2 source well in the southern portion of the Gordon Creek lands as early as the third quarter of this year.
The second LOI contemplates an investment of up to US $20 by a Houston Texas based private company (the "HoustonCo") to fund a mutually agreed development plan. HoustonCo will earn various interests at certain stages of development resulting in an overall 50% working interest (75% working interest before payout on earning wells) in the Gordon Creek property. Thunderbird will retain ownership of its existing facilities and infrastructure and will charge mutually agreed fees for gas gathering, compression and water treating and disposal. HoustonCo has completed its due diligence on the project and is currently in the funding phase. Subject to the timely completion of HoustonCo's financing, Thunderbird anticipates kicking off the joint venture in the third quarter with a 15 well drilling program. The joint venture remains subject to financing and to formal documentation.
"We are extremely pleased with the progress we have made over the last year, despite a very tough gas market," stated Cameron White, President of Thunderbird. "The work that our team has completed over the past year has provided us with a tremendous insight into the optimum operating parameters and growth potential at Gordon Creek. More importantly, the performance over the past year has both validated our views and exceeded our expectations. We are very much looking forward to continued improvement in the gas markets that will lead to the implementation of our development plans."
Thunderbird Energy is a Canadian based oil and gas exploration and Production Company with interests in the US Rockies and mid-continent regions. Thunderbird's holdings include the Gordon Creek, Utah natural gas field, the Rush County, Kansas light oil project and a light oil exploration project in Weston County Wyoming.
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