Second Wave Updates on Canadian Operations
Second Wave has successfully tested is first Gilwood/Beaverhill Lake exploration well in Judy Creek and provide a general operations update.
- Second Wave's 100% working interest 03-14-063-09W5 Gilwood well tested at combined final flow rate of approximately 590 barrels of oil equivalent per day consisting of 40% condensate and natural gas liquids (NGLs) and 60% natural gas. No stimulation was required to achieve this test rate.
- Second Wave's initiated its Pekisko horizontal drilling program on the SW block of its Judy Creek land base with the first three wells of its anticipated drilling program drilled, cased and awaiting completion.
- The Company received regulatory approval to water flood its Pekisko pool in the NE block of its Judy Creek land base with the water injection project scheduled to start in Q4, 2010.
- Drilled, completed and commenced production of its first 100% working interest horizontal Ellerslie light oil well in Judy Creek with initial rates exceeding 225 boe/d (60% oil).
- Second Wave is exiting the third quarter with production at approximately 1,900 boe/d and continues to forecast year-end 2010 exit rates of 2,800 boe/d. Despite positive drilling results, average production rates for the third quarter are expected to be relatively flat in comparison with the second quarter due to wet weather-delays on operational and capital activities.
Judy Creek, Alberta - Gilwood/Beaverhill Lake Formation
In the third quarter Second Wave drilled, cased and completed its first Gilwood/Beaverhill Lake exploration well in Judy Creek at its 100% working interest 03-14-063-09W5 location. The Gilwood formation, which resides below the Beaverhill Lake formation, was completed and flow tested in August 2010 for a period of 27 hours before it was shut in. Final production rates from the Gilwood formation during the test period were 2.8 million cubic feet per day (mmcf/d) of liquids rich natural gas and 130 barrels per day (bbl/d) of
65o API condensate for a total combined rate of approximately 590 boe/d (40% condensate and NGLs). The Company elected not to fracture stimulate the well as flowing well head pressures increased throughout the test period. Based on these initial results, liquid recoveries from the Gilwood gas are expected to exceed 50 bbl/mmcf, providing the expectation of higher netback gas production. The Company is proceeding to tie in the 03-14 well to its existing Judy Creek facilities and expects to commence production in the fourth quarter of 2010.
In addition to the Gilwood completion in the 03-14 well, and as part of its planned evaluation of the Beaverhill Lake formation, Second Wave obtained and analyzed an open hole core in the 3-14 well bore. Core analysis indicated that the Beaverhill Lake had an aggregate of four meters of hydrocarbon pay with an average porosity of approximately six percent. Second Wave delayed further testing of the Beaverhill Lake formation due to the success of the deeper Gilwood flow test. The Company is currently planning to drill an additional vertical well in the first half of 2011 to further delineate and evaluate both the Gilwood and Beaverhill Lake formations on its Judy Creek exploration lands.
Judy Creek, Alberta - Pekisko Formation
Second Wave initiated its horizontal Pekisko drilling program on the SW portion of its Judy Creek land block with its first three horizontal wells cased and awaiting completion. The Company anticipates drilling, completing and bringing on production a total of six or seven Pekisko horizontal oil wells from its Judy Creek SW block in the fourth quarter of 2010. Second Wave is currently building pipeline infrastructure to its SW land block and expects to complete the first phase of this pipeline in mid-October at which time it expects the first three Pekisko horizontal oil wells in the SW block will commence production. Thereafter Second Wave anticipates bringing on a new Pekisko horizontal oil well approximately every two to three weeks until the end of the first quarter of 2011.
Based on well performance from the completion of its first three long leg Pekisko horizontals using multi-stage acid fracturing techniques, Second Wave is planning to continue to use this technique on all future Pekisko wells in the area. Results from these first three completed wells have met expectations with average rates per well exceeding 130 boe/d (65% oil) after 60 days of production.
In the third quarter Second Wave engaged a third party to complete an advanced rock properties study on the Pekisko core extracted from its 08-31-063-09W5 vertical well. The objective of the study was to determine the technical feasibility of a water flood in the Judy Creek Pekisko formation by completing a micro water flood on selected core intervals. Results from this preliminary study indicated that 47% of the original oil in place within these selected core intervals was recovered by flooding the core with water. Second Wave believes that this recovery value is optimistic for the pool as a whole; however, the results imply that there is technical and economic merit in proceeding with a water flood pilot on its Judy Creek Pekisko pool. Accordingly, Second Wave has sought and obtained regulatory approval to initiate a water flood pilot in the Pekisko formation in its NE Judy Creek land block. The Company is scheduled to initiate water injection in the fourth quarter of 2010 and expects to obtain results in 2011.
Judy Creek, Alberta - Ellerslie Formation
In the third quarter Second Wave drilled, completed and commenced production from its first horizontal well in the Ellerslie A light oil pool in Judy Creek at its 100% working interest 13-15-062-10W5 location. The Ellerslie formation is shallower than the Pekisko formation and is a secondary geological target in Judy Creek. The 13-15 well was a follow-up location to the Company's 100% working interest 13-10-062-10W5 vertical well which had successfully delineated the Ellerslie A light oil pool in the first quarter of 2010. The 13-10 well achieved production rates of approximately 130 boe/d (70% oil) after being on line for 110 days. To facilitate the drilling of the 100% working interest 13-15-062-10W5 horizontal oil well the 13-10 vertical well was shut in at the start of the third quarter. Upon successfully drilling and completing the 13-15 well Second Wave commenced construction of a 100% owned permanent battery and gas sales system to facilitate production from these two wells and future development in the area. Both wells remained shut in during the construction period which concluded late in the third quarter. The wells were subsequently brought on production with final rates from the 13-15 horizontal well exceeding 225 boe/d (65% oil) over a 20 day test period. Based on field estimates, current production from the Ellerslie battery is approximately 350 boe/d (65% oil). The Ellerslie battery and associated wells have now been on full production for 25 days in the third quarter. The Company is planning to continue delineation of the Ellerslie A light oil pool with an additional two to four 100% working interest vertical wells planned prior to the end of the first quarter in 2011.