Alberta Star Starts Up Taps at Saskatchewan Well
Alberta Star Development has completed and placed on production its previously announced well located at C11-6-50-25 W3M ("C-11") (NR October 15 ,2010). The initial production rates from the newly completed C-11 test well, have met or exceeded initial production flow expectations. The Company will control the well production, at approximately 80 bbls/d in accordance with established good oil field practices. The C-11 well is offsetting the Company's producing C12-6-50-25 W3M ("C-12") well, which is situated in Landrose, Saskatchewan. The C-12 well is currently producing at 80 bbls/d gross of heavy oil (4 bbls/d net before payout and 20 bbls/d net after payout). Combined production flow from the C-11 and C-12 wells is approximately 160 bbls/d gross of heavy oil (8 bbls/d net before payout and 38 bbls/d net after payout to Alberta Star. All production from the C-11 well is from the McLaren formation.
In addition, the Company has completed drilling and casing of the heavy oil well situated at C14-6-50-25 W3M ("C-14") in Landrose, Saskatchewan. The C-14 well is expected to be completed and in production in the next few days. The C-14 is also being completed in the Mclaren formation. Initial Oil shows from the C-14 test well location, which also tests the McLaren formation, have been extremely encouraging.
Alberta Star holds a 50% working interest in the C-11 and C-14 wells which form part of the heavy oil assets acquired by Alberta Star on August 6, 2010 from Western Plains Petroleum Ltd. ("Western Plains"). Arctic Hunter Uranium Inc. ("Arctic Hunter") under a (Participation Agreement (NR October 15, 2010) has agreed to pay 100% of Alberta Star's share of the cost to drill, complete and equip or abandon the s C-11 and C-14 wells to earn a 100% (50% net) interest before payout, reserving to Alberta Star a convertible overriding royalty of 10% until payout. After payout, Alberta Star has the option to convert the gross overriding royalty to a 50% working interest (25% net) in the C-11 and C-14 well spacing units or remain in a gross overriding royalty position. Western Plains is the operator of the C-11 and C-14 wells.
The C-11 and the C-14 wells form part of the Company's previously announced in-fill drilling program located on section 6-50-25 W3M in Landrose, Saskatchewan. Drilling completion and equipping costs are expected to average $400,000 per well ($200,000 net to Arctic Hunter). The locations of the C-11 and C-14 wells are adjacent to the Company's successful C12-06-50-25 W3M well which was drilled and completed in July 2010, and which is currently producing approximately 80 bbls/d gross of heavy oil (4 bbls/d net before payout and 20 bbls/d net after payout to the Company).