Connacher updates 2005 activity
Tuesday January 18, 9:01 am ET
CALGARY, Jan. 18 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX) announced today it has now completed drilling the first three of 19 planned core holes at its Great Divide oil sands project, situated approximately 80 kilometers southwest of Fort McMurray, Alberta.
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These three core holes are part of a planned twelve well program on what Connacher has labeled Pod One, a Middle McMurray oil-bearing channel located on a portion of the company's 101 section (64,640 acre) land holding in the region. Previously, in early 2004, Connacher drilled 11 delineation core holes on this channel. Subsequently, in October, 2004 DeGolyer & MacNaughton Canada Limited, an independent engineering consultant, assigned 52.8 million barrels of possible recoverable reserves to this channel, using NI 51-101 parameters, but obviously before considering the results of the company's current drilling program.
The 2005 program on Pod One was designed to provide additional information about the geometry and size of the channel to support Connacher's planned application to develop this accumulation into a production project using SAGD technology. Based on preliminary results from these first three wells, including a review of well logs, Connacher is encouraged the accumulation may be larger than previously mapped, but no additional reserve estimates or calculations have been undertaken and an analysis of the actual cores remains to be completed.
Connacher expects the remaining nine wells on Pod One will be completed by April 2005 and data will be integrated with information presently in the company's possession. Engineering design, simulation and environmental studies which are needed to support an application to the Alberta EUB and to Alberta Environment to commence production are underway, targeting a submission by September, 2005. Upon receipt of regulatory approval, Connacher would expect to commence a 10,000 bbl/d project in 2006.
Later in the first quarter 2005 Connacher also expects to drill up to seven new core holes on its Pod Three channel, located in the Marianna Lake region approximately six miles southwest of Pod One. There is less well control associated with Pod Three than was the case with Pod One when the acreage was acquired in early 2004.
Connacher was also successful in acquiring, at low cost, an additional 100 percent working interest in 18 sections (11,520 acres) of oil sands leases at the December 15, 2004 Alberta Crown Sale. This brought the company's total holdings at Great Divide to a 100 percent working interest in 101 sections (64,640 acres). At that sale, the top price paid for nearby acreage exceeded $2,300 per acre, almost double the previous high price paid for lands in the area in October, 2004.
Connacher also announces that it expects to commence drilling in southwest Saskatchewan at Tompkins and Battrum in the near future, with up to 25 wells budgeted for these regions in 2005. An earlier startup has been constrained by certain testing procedures at Tompkins and by extremely cold weather during the first part of 2005.
Connacher is also pleased to announce that it is supporting initiatives by its 61 percent-owned subsidiary, Petrolifera Petroleum Limited, to secure two new high potential oil and natural gas concessions in a second jurisdiction in South America. Petrolifera has also initiated a 144 square kilometer 3-D seismic program on the 95,000 acre Puesto Morales/Rinconada concession in the Neuquen Basin, Argentina. Drilling is expected to commence in the second quarter, 2005.
Connacher is a Calgary-based oil and natural gas exploration and production company. Its principal asset is its 100 percent ownership of the Great Divide oil sands project in Alberta, where 101 sections (64,640 acres) of oil sands leases are held. The company also owns extensive conventional acreage and oil production in the Battrum and Tompkins regions of southwest Saskatchewan. Connacher also owns 61 percent of Petrolifera Petroleum Limited, actively producing and exploring for oil and natural gas on its 95,000 acre Puesto Morales/Rinconada concession in the Neuquen Basin, Argentina. Petrolifera is also negotiating two new concessions in South America. Connacher's current production is approximately 950 boe/d.