Grand Petroleum Successful with Summer Drilling Program in Canada
Grand Petroleum drilled a total of 15 gross (9.7 net) wells in the third quarter of 2005 resulting in 6 gross (4.1 net) gas wells, 7 gross (4 net) oil wells and 2 gross (1.6 net)dry and abandoned wells for an 84% success rate. A total of 8 gross (5.7 net) wells were drilled in Grand's high impact West Central Alberta core area with a 90% net success rate.
At Atim, west of Edmonton Alberta, Grand drilled 2 gross wells both at a 60% interest resulting in one dry hole and one successful gas well. The well has been tested and is scheduled to be tied in before year-end. Grand's existing well at 12-10-54-27W4 was recompleted in an uphole zone and commenced production at over 225 barrels of oil equivalent ("boe") per day net to Grand. Two wells (1.6 net) are being licensed in the area and are scheduled to be drilled before the end of 2005.
At St. Anne, west of Atim, Grand drilled one gas well and one oil well in the third quarter, both at a 100% working interest. The gas well was tested at approximately 2 million cubic feet per day ("mmcf/d") and is scheduled to be tied in within the next four weeks. The oil well is currently being equipped for production.
At Sylvan Lake, west of Red Deer Alberta, Grand drilled one gas well at a 100% working interest that is currently testing at 4.06 mmcf/d on a 7.94 mm choke with a flowing tubing pressure of 13,080 kPa. Tie-in options are being considered for this well and initial estimates are that the well should commence production just prior to year-end or early in the first quarter of 2006. One well (100% working interest) is planned offsetting this discovery for the first quarter of 2006. Grand's well at 5-29-36-4W5 drilled in the second quarter (Grand 69.25% BPO, 49.25% APO), has commenced production at a restricted rate of approximately 250 boe/d net to Grand.
At Pine Creek, near Edson Alberta, Grand drilled 3 gross (1.5 net) multi-zone gas wells. The first well has been tested and should commence production next week at an initial rate of over 200 boe/d net to Grand. The second well has been tested and stimulated and is currently shut-in for pressure buildup. The third well is currently being completed and fracture stimulated with initial results expected within the next 7 to 14 days. Grand is planning additional drilling on its lands in this area in 2006.
In East Central Alberta Grand drilled one dry hole (1.0 net) in the third quarter and plans to drill an additional one horizontal (1.0 net) and 4 gross (2.5 net) vertical wells before the end of 2005.
At Hazelwood in southeast Saskatchewan Grand participated in the drilling of 6 gross (3 net) oil wells in the third quarter. Current total Saskatchewan production is approximately 260 boe/d net to Grand. Grand and it's partner have drilled a total of 10 wells (5 net) at Hazelwood to date in 2005 with an additional 8 gross (4 net) wells to be drilled late in 2005 or in the first quarter of 2006 depending upon access to drilling rigs.
Grand is still estimating total capital spending (including acquisitions) of approximately $45 million in 2005. Grand currently forecasts average production of approximately 1,800 boe/d for 2005 with third quarter production averaging approximately 2,000 boe/d up over 50% from second quarter average production of 1,302 boe/d. Grand estimates from field receipts that current production is in excess of 2,200 boe/d with over 800 boe/d awaiting tie-ins. Grand is therefore increasing it's 2005 forecast exit rate to a range of 2,500 boe/d to 3,000 boe/d.