Bronco Cites Significant Increases in Wabiskaw Heavy Oil Production

Bronco Energy has announced recent significant increases in production from its Upper Wabiskaw heavy oil field at Wabasca, Alberta. The impact of higher production levels improves the financial stability of the Company during these economically challenging times.

Bronco's production team is focused on well optimization efforts and building on the recent production results outlined below:

  • The past seven day sales production average is approximately 2,112 boe/d (comprised of 1935 bopd and 1061 mcf/d). Stabilized production is trending upward in conjunction with higher oil cuts on several additional wells brought on to production since the mid-October commissioning of the Free Water Knock Out vessel;
  • Increased fluid handling capacity, larger water disposal volumes with two operating disposal wells and improved facility operating uptime have allowed operators to become more aggressive with well optimization efforts in terms of both the number of wells running and pumping speeds. The current producing well count is approximately 45, with a growing number of wells contributing to the current production level;
  • Increased fluid levels and improving oil cuts are being observed throughout the field. This includes new production contributions from the 6-30 and 12-30 pads, located on the southern portion of Bronco's East Block Wabiskaw development area, that have only been on production since November 10, 2008;
  • Operating cost improvements are also being realized: less condensate, as a percentage of sales volumes, is being used for blending; the majority of producing wells are now electrified; the battery is now powered by fuel gas; and fixed operating costs are being spread across larger production volumes, resulting in overall lower per boe unit operating costs.

Initial production has also commenced from Bronco's first Middle Wabiskaw horizontal well. The 103/12-25-79-23W4M well is the first known horizontal test well drilled into this zone in the Pelican Lake area. The well has been on production for approximately 17 days. Over the past week, two tests have indicated that production levels on the well are approximately 88 bopd with an oil cut of 70%.

Bronco's mapping indicates that this zone is prospective on up to 17 sections in close proximity to its battery and treating facilities. The Middle Wabiskaw zone has similar reservoir properties to that of the Upper Wabiskaw and could be developed in a similar manner, including long term enhanced oil recovery utilizing polymer waterflood.

Development of the Middle Wabiskaw would also realize capital cost efficiencies as future drilling into this zone could be accessed from existing pads and utilize existing pipeline and facilities infrastructure. Development plans for this zone are pending upon obtaining additional production history and data on the well.

Brian Alford, President and CEO of Bronco, commented, "The increases in production and Middle Wabiskaw heavy oil tests are encouraging results for Bronco. While the current economic challenges seem daunting, the Company's balance sheet and recent facilities and infrastructure enhancements are anticipated to allow for continued production growth as oil wells continue to be optimized."

Of note, the Company also advises that Alford recently disposed of a nominal portion of his Bronco shares to cover a fraction of the tax liability created by his exercise of certain options that expired in June 2008. Several other insiders purchased Bronco shares during the same time period.

Bronco also announces that it's wholly owned subsidiary, Bronco Drilling Services Ltd., has entered into a minimum 120 day contract for its telescopic double Rig#1 with a major producer to drill in the Wabasca area commencing in January 2009. This will provide additional near term working capital resources that will be available for Bronco's Wabiskaw development plans.

Bronco is continuing to evaluate its 2009 capital expenditure plans in light of the current high global market volatility, and expects to provide an update on its plans prior to year end.