Neon announced a significant increase in oil production rate at the 100% owned and operated North San Ardo oil field in California, with the field currently producing oil at an average rate of 750 bopd.
Neon completed the Lombardi 15-27H well in the Company's North San Ardo oil field on August 22, 2010. The well's initial rate was 230 bopd, as announced to the market on 27th August. Since then the production rate has continued to climb to a peak rate of 488 bopd. This has lifted the field production rate to an average 750 bopd.
These improved rates will have a positive impact on Neon's near term cash flow, potentially accelerating payback of the US $750,000 capital expenditure on the well. The anticipated natural decline is expected to be offset by the positive effect of heat which is being introduced into the reservoir in the form of steam from the dedicated cyclic steam system which was commissioned in late July 2010.
Neon's Managing Director, Ken Charsinsky commented, "The increased production rate re-affirms our strategic commitment to invest in the North San Ardo oil field. We have already identified additional drilling locations, and we anticipate that new drilling conducted with the benefit of 3D seismic data, combined with the effects of cyclic steaming, will lead to improved field production levels in the near
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