Patch to Drill Four Wells During December in Alberta
Patch International has scheduled four separate oil and gas drilling programs for the month of December. This is a USD $2 million program. The first well is to be spudded next week.
Mcleod Project, Alberta, Canada
PTII and its partners plan to spud their next well (10-20) on an adjacent property to their producing W5M McLeod oil well during the week of December 5, 2005. The new well (10-20) at the McLeod location will test the Middle Ellerslie and Basal Belly River zones encountered in the McLeod 2-20.
The first well, the 2-20 has been successful and is now in full production. The W5M McLeod Project is approximately 100 miles west of Edmonton, Alberta near the town of Edson. There are four zones on the property that received either or both oil and gas shows from all of the zones.
Based on a 24-hour production test, this first McLeod well flowed at a rate of approximately 250-300 bbls of oil (38 degrees API) per day. The testing showed outstanding oil recovery results with the last swab recoveries being 99% oil and 1% water.
Lloydminster, Elnora, and the Atlee-Buffalo areas; Alberta, Canada
On November 29, 2005, PTII signed a farm-in agreement to participate for a 50% working interest in the following three prospects with both oil and gas plays with estimated reserves exceeding over 800,000 boe when fully exploited. This is a USD $2 million program. Drilling on all three prospects is anticipated to commence before the end of December.
LLOYDMINSTER: PTII and its partner intend to spud the first well by December 31, 2005, subject to the availability of a rig. The prospect's target depth is 650 meters and the oil production is from the upper Sparsky formation sandstone. The 2 well locations are offsetting oil wells averaging 50-90 bopd, and 50 mcf per day. The expected reserves are 60-100 mbo, and 150 mmcf of gas per well. Average porosity is 30-33%. Depending on the test result of the first well, the partners anticipate drilling 4 wells in the formation.
ELNORA: PTII and its partner intend to spud the first well by December 31, 2006, subject to the availability of a rig. The Stettler formation gets its best production from horizontal drilling due to its horizontal heterogeneity. The formation shows exciting prospect with primary fractured dolomite and porosity greater than 30%. Estimated reserves are in excess of 350,000 bbls of oil.
ATLEE-BUFFALO: PTII and its partner plan to spud the first well by December 31, 2006, subject to the availability of a rig. The productive zones are: Glauconitic oil, Basal Colorado gas and Viking gas. The estimated reserves are: Glauconitic oil of 100-200 mbo/well; Basal Colorado of 0.5-1 Bcf/well; and Viking gas of 0.5 Bcf/well. There are multiple locations with the first well location to penetrate all three zones with a total depth of 900 meters.
PTII currently has cash reserves that it intends to utilize to build its oil and gas assets through selective acquisition and participation in farm-in prospects. Commenting on the news, David Stadnyk, PTII President said, "we are poised for substantial growth and value creation for the shareholders and we believe that the exciting time is ahead for PTII. With the significant working interest position we have assumed in the 4 well plays, PTII is on the right track to our target goal. As previously announced, the buyback period for PTII to purchase up to 5% (271,000) of its 5.4 million shares outstanding has begun. Also, PTII has begun the process of selling up to 35% of its 11.2 million shares in Pharmaxis and intends to use a portion of its growing company treasury to participate in additional larger-scale oil and gas projects. Over the next 18 months PTII's goal is to become a 1000 bbls of oil/day producer and I am confident that the forthcoming drilling program will contribute to reaching that goal."
PTII is a junior oil and gas producer that currently earns oil revenue from 19 oil wells. These wells provide the company with short-term and long-term cash flow. This cash flow is expected to increase in the very near future because the McLeod 10-20 well is now in full production. PTII has properties in North America, and is exploring opportunities in North Africa, South America, and Ukraine. PTII has begun a program to sell up to 3,920,000 (35%) of its 11.2 million shares investment in Pharmaxis (Australian Stock Exchange: PXS, NASDAQ NM: PXSL). 5.6 million shares of its Pharmaxis shares or the net proceeds of the sale of those shares, both after taxes and costs, have been declared as a dividend to shareholders of record as at July 30, 2004, subject to regulatory approval.