Vermilion Touts 100% Drilling Success in Netherlands
Vermilion announced 100% success from its four-well drilling program in the Netherlands with combined estimated initial production volumes in excess of 4,000 boe/d net to Vermilion. With current Netherlands production capacity of approximately 3,200 boe/d, Vermilion’s recent program is expected to provide significant production growth in 2010 and 2011 as the respective wells are brought on production through a staged tie-in process.
Two of the four wells, Middelburen-2 and Middenmeer-3, were considered lower risk development wells with access to needed infrastructure that should enable tie-in during the first quarter of 2010. These wells are expected to be brought on at a combined rate of approximately 15 mmcf/d net to Vermilion (each are 92.8% working interest) and add nearly 2,000 boe/d of average production net to Vermilion in 2010. Accordingly, Vermilion is currently projecting that it will approach the high end of its initial production guidance range of 29,000 to 31,000 boe/d in 2010.
The two remaining wells, the Vinkega-1 and the De Hoeve-1 (each representing up to 42.25% working interest), require production permitting, pipeline construction and all related regulatory approvals prior to tie-in. Production from both wells is expected on-stream by early to mid-2011. As previously announced, the Vinkega-1 tested at gross rates in excess of 30 mmcf/d and is expected to produce at a relatively stable gross rate of approximately 17.5 mmcf/d (1,150 boe/d net to Vermilion). The De Hoeve-1 well is currently being tested. Initial results from two of the four zones are encouraging and we expect this well will add in excess of 1,000 boe/d net to Vermilion beginning mid-2011.
Vermilion is working to obtain permits to drill four to six additional wells beginning as early as the first quarter 2011, and has identified more than thirty further prospects that are expected to accommodate ongoing organic growth in the Netherlands, subject to regulatory approvals. Natural gas prices in the Netherlands are based on a basket of oil-based products with a small spot gas component. Vermilion realized nearly C$9.00 per mcf for its Netherlands natural gas in 2009 and is expecting similar pricing levels in 2010.
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