Any comments on this "Little" play from anyone?
Little Mountain to recomplete cased Alberta well
Little Mountain Resources Ltd LIT
Shares issued 18,044,354 Sep 26 close $0.19
Mon 29 Sept 2003 News Release
Mr. Robert Sim reports
Little Mountain Resources has proposed to participate in a joint venture
project near Grande Prairie in northwest Alberta to recomplete a cased gas
well for production. The well was drilled in 1999 by Poco Petroleum and
cased after initial testing. Poco was later acquired by Burlington
Resources.
An exceptional opportunity is available for participating in a single well
re-entry project in the Karr area of Alberta in Township 63, Range 3, W6M.
Two sections of mineral rights are available, with a well re-entry
opportunity for gas and natural gas liquids, with the potential for a
follow-up re-entry/redrill in the adjoining section. This project targets
the Banff zone in the 1998 vintage Poco well at 8-24-63-3W6, which tested
gas at a final rate of three million cubic feet per day, along with 1,745
barrels per day of condensate. The Banff is an overpressured reservoir with
approximately 7,500 psig bottom-hole pressure.
A 100-per-cent interest was acquired in Section 24-63-3W6, and a
62.25-per-cent interest in offsetting Section 19-63-2W6 from Burlington
Resources. Little Mountain is taking a 10-per-cent participation in this
project (estimated $105,000 in costs), based upon a
100-per-cent-working-interest capital investment to earn an 80-per-cent
working interest before payout and a 40-per-cent working interest after
payout. Straight-up economics indicate up to a six-month payout period and
100 per cent worth approximately $20-million net present value before tax
(10 per cent discounted). An AMI of approximately a two-mile boundary
surrounding the subject lands is anticipated. The well production will
qualify for the deep gas royalty holiday of approximately $900,000, thereby
favouring an accelerated payout period. The gross capital is estimated to
be $600,000 for a completion and stimulation of the existing zone. This
will preserve the mineral leases in the subject lands, and the data will be
evaluated to quantify the Banff formation reserve volumes. A further
$450,000 of gross capital has been estimated for a two-mile tie-in and
Scada-controlled surface facilities to handle the high volumes of gas and
natural gas liquids.
It is believed the risk to re-establish production from the 8-24 well is
minimal. Production life is estimated at three to five years from depleting
fractured limestones.
For the purposes of a simple completion, a low-cost drill out of the
existing bridge plug, perforating and an acid frac stimulation is planned
for $600,000. Based upon a seven-day flow test to quantify the reserves, it
is estimated that approximately 5,250 barrels of condensate could be
recovered and sold for approximately $50 per barrel, thereby generating
$262,500 in gross revenue. This would reduce the effective cost of the
workover to $282,700.
Initial flow rates are projected to be three million cubic feet per day and
750 barrels per day of condensate with an 18-per-cent decline rate. Gross
reserves are estimated at 4.7 billion cubic feet gas and 1.25 million
barrels of liquids.
Joint venture update
Shoot Out west
The company has been informed by the operator Golden Valley Mines that all
preparations to proceed with planed exploration work are in place with
crews, fuel caches and a helicopter on-site. It is anticipated that during
the coming week, immediate progress will be made with geophysical and
geological target selection done as drilling commences. More details
regarding the progress of the program is expected to be made available in
the near future.
The company has a flow-through financing of 500,000 units, being one common
share and one non-transferable share purchase warrant at a price of 20
cents per unit, with a warrant with a two-year term. The warrant will be
exercisable for one common share at a price of 30 cents per share in the
first year and 40 cents per share in the second year. The placement is
subject to acceptance and approval by the TSX Venture Exchange. |
