Crocotta Ready to Kick Off $40MM Drilling Program in Canadian Assets
Crocotta Energy Inc. has approved a Q3/Q408 Drilling Program of $40 million. The Drilling program will allow Crocotta to further its key growth plays in the Rock Creek and Montney formations using horizontal multi-frac technology in addition to conventional drilling on various key properties. The program will be funded entirely from cash flow and undrawn bank credit facilities.
The program consists of approximately 16 gross wells (12 net) and is estimated to add approximately 2,000 boepd of risked production. We have estimated that Q109 average production will be approximately 3,000 boepd based on wells being placed on-stream throughout the period from November 2008 through the end of February 2009 (excluding the Dawson Montney well which will not be on-stream until late 2009 or early 2010)
The drilling, which includes 3 (2.5 net) Rock Creek horizontal wells and 1 Montney horizontal well also exposes the company to materially higher potential production rates on an unrisked basis in addition to setting up numerous offsetting locations pending success.
Niton & North Pembina, Alberta
The Niton and North Pembina areas of Crocotta's West Central Alberta core area are the main focus of the drilling program with approximately 50% of the budget ($20 million) allocated to the area.
Crocotta anticipates it will drill 9 (7.8 net) wells including 3 (2.5 net) Rock Creek horizontal wells, 3 vertical Rock Creek wells and 3 (2.3 net) Mannville wells. The Rock Creek horizontals have been very prolific in the area and initial production rates range from 250 boepd to over 1,500 boepd per well. Crocotta has identified over 20 horizontal Rock Creek locations on its lands at this point in time.
Dawson & Tupper, British Columbia
Crocotta holds an average 76% interest in approximately 12,500 acres of Montney rights in the Tupper and Dawson areas of British Columbia. The lands are located in the Montney fairway that has significant natural gas resource potential. Crocotta anticipates it will drill its first Montney horizontal in late September or early October of this year.
Offsetting horizontal wells in the area have initial rates ranging from 300 boepd to over 1,500 boepd. Crocotta has identified over 45 potential horizontal drilling locations on its lands.
Lookout Butte, Alberta
Crocotta holds a 50% working interest in 7,040 acres of land and can earn a 50% working interest (via farm-in) in an additional 5,120 gross acres by drilling 2 wells by early 2009. Crocotta plans to drill 2 (1.0 net) wells following up a Mannville discovery well that was drilled by the company late in 2007. The discovery well has up to 4 potential pay zones of which only the lowest most formation is currently completed. Wells in the area have had initial rates ranging from 20 boepd to over 400 boepd.
The remainder of the drilling program consists of 2 development wells and 2 exploratory wells in West Central Alberta.