Diaz Resources to Accelerate Lloydminster Development in Alberta
Diaz Resources plans to accelerate its development activities on a section of land strategically located in the Lloydminster area of central Alberta.
Diaz holds a 50% working interest in the section that presently has one horizontal well, drilled in the fall of 2008, which is currently producing 63 barrels of oil per day. The well has produced approximately 6,000 barrels of oil to date.
Diaz is the operator of the lands and had planned to drill three additional wells on the section; however, the Company has received a notice from its partner of their intention to file a holding application which would allow for up to 64 wells to be drilled on a 640 acre holding. The partner is the operator the section immediately to the north of the Diaz operated lands and has drilled 31 horizontal wells to date on that section, in which Diaz has an overriding royalty interest. According to public records the production rates from those wells reached a maximum of approximately 1,320 barrels per day, with associated gas, and are currently producing at a rate of over 1,180 barrels per day.
As a result of higher oil prices, encouraging production rates on Diaz's oil well, and the Company's interpretation, based on geological and 3D seismic, that the entire section could be hydrocarbon bearing, the Company plans to focus its 2009 efforts on rapidly developing this oil pool.
In order to finance this development the Company is investigating a number of financing alternatives. Diaz will also benefit, in the short term, from the new Alberta royalty incentive program which will defray some of the drilling costs for additional wells and provides a lower royalty rate for the first year of production for the new wells.