Enhanced Oil Touts Production Levels at NM Fields

Enhanced Oil provided the following update regarding the Company's activity for September 2011.

The Company had previously announced, on January 19, 2011, that its principal focus for 2011 is the accelerated development of the Company's oil reserves at the Milnesand, Chaveroo and Crossroads oil fields. Specifically, during 2011 the Company intends to focus on:

  • Initiating the Milnesand oil field 20-acre infill drilling program in New Mexico.
  • Accelerate well reactivations and workovers at both Milnesand and Chaveroo oil fields.
  • Exploitation of behind pipe zones in existing wells in Crossroads oil field.
  • Completion of pipeline right of way for the Company's proposed 41 mile pipeline from Kinder Morgan CO2 Company LP's Cortez Pipeline to the Company's Milnesand and Chaveroo oil fields.
  • Preparation for the potential delivery of CO2 to Milnesand oil field.
  • Continued evaluation of a helium project in our St Johns field.
  • Continued evaluation of a geothermal project in our St Johns field.
  • Market and industry exposure of Enhanced Oil Resources.

Oil Field Operations

The Company's crude oil production has averaged approximately 447 barrels of oil per day (bopd) for the month of September; the highest average daily rate achieved so far this year. At Crossroads, September average production totalled approximately 296 bopd, while Chaveroo and Milnesand production has averaged 133 bopd. The increase in production at both Milnesand and Chaveroo is in response to our ongoing workover program.

On September 20th, the Company met with the New Mexico Oil Conservation Division (NMOCD) and presented its six month plan for the Milnesand field following the approval, in May, of the Milnesand Plan of Development. On October 7th, the Company received approval from the NMOCD with an Agreed Compliance Order that provides for the initiation of our infill and lateral program previously proposed. Our current plan is to sidetrack up to five existing wells and laterally drill the San Andres pay section for a distance of up to 2,000 ft. Following the drilling of each lateral well the pay zone will be cased and a multi staged frac will be performed. The engineering design has been completed and we continue to solicit vendors to initiate this program as soon as services can be provided. The availability of fracturing services in the Permian Basin is more limited than the availability of other oilfield services, which could affect the timing of well completions. At Crossroads, we have received approval to proceed with the conversion of one existing well to a second water injector, thus increasing our ability to process greater total fluid volumes, which in turn should allow for the potential increase in oil production.

St. Johns Development

Plans are continuing for the remaining two wells required for drilling under the St. Johns Unit agreement obligations. Due to the timing of rig availability we now expect to initiate that drilling program towards the end of the fourth quarter of this year. Both wells will be targeting the high helium area of the field within the Amos Wash interval.

Market and Industry Exposure

The Company continues to work on its intended plan for increasing oil production, advancing the St. Johns project and increasing market exposure. During the third quarter of 2011 we presented at the IPAA OGIS conference and the Global Hunter oil conference in San Francisco and the World Oil Council conference in New York. Additional conferences are planned and these will be announced in the near term.

Barry Lasker, President and Chief Executive Officer of Enhanced Oil Resources said, "The start up of our lateral program at Milnesand is a key component in our business plan to increase production from our San Andres oil fields. Should our initial wells show promise we expect that in excess of 300 drilling locations could be drilled throughout our 27,000 acres of leases within the Milnesand and Chaveroo oil fields where, to date, only 14 percent of the original oil in place has been recovered by the original 40 acre vertical development."