This one has more potential ...
biz.yahoo.com
Heartland Oil and Gas operational update
Monday February 7, 11:52 am ET
www.heartlandoilandgas.com
VANCOUVER, Feb. 7 /PRNewswire-FirstCall/ - Heartland Oil and Gas Corp. (OTCBB: HOGC - News; "the Company") announces that since closing on the acquisition of Evergreen's Forest City Basin properties on September 27th, 2004, the Company has reviewed technical data and operational practices and executed an initial phase of activity designed to establish commercial coal bed methane production. With coal bed methane rights on nearly one million net acres, the Company has focused its efforts on accelerating commercial gas production by more rapidly dewatering coal bed methane reservoirs.
During the last four months, the Company has completed 17 well bores, including four refracs, drilled seven wells, and completed one water disposal well. When completed, Phase 1 capital expenditures are expected to total approximately $2.4 million.
The Company has streamlined field operations to increase operational efficiencies. In addition, Company management, in conjunction with members of the advisory board and the field operations team, has redesigned key components of the drilling and completion process.
Through these co-coordinated efforts, the Company has both substantially increased initial stage gas production while lowering drilling and completion costs. In some cases, coal bed gas production has nearly doubled with the addition of new wells. Water production, often an indicator of completion effectiveness essential to coal bed methane production, has increased dramatically.
Because of the basin wide magnitude of the acreage position, the company has divided the acreage into three project areas: Southern Block, Northern Block, and Northwestern Block.
Southern Block: Activity in the southern block has focused on completing or recompleting nine of thirteen wells drilled by Evergreen in and around the Lancaster pilot located six miles southeast of Miami, Kansas. With all nine wells on pump, initial early stage gas production from the Southern Block has increased from approximately 65 thousand cubic feet of gas per day ("Mcfgpd") at the time of the acquisition to nearly 150 Mcfgpd.
Phase 1 completion costs ranged between $30,000 to $40,000 per well, with new wells costing approximately $70,000 to drill and complete. These costs are down significantly from the earlier completion costs estimated at $120,000 per well.
The Company has drilled six infill wells intended to increase well density at Lancaster from 80 acre spacing to 40 acre spacing. In addition, the Company has drilled a water disposal well in the area to support water production associated with a four well expansion of nearby pilots.
Northern Block: Northern block activity has focused on completing pre-existing wellbores in a 12 well pilot located 15 miles northwest of Leavenworth, Kansas. Early indications are that the wells are currently dewatering at significantly higher rates than previously experienced. The Company plans to initiate drilling of six wells intended to down space the BTA pilot from 160 acre spacing to 80 acre spacing.
Northwestern Block: The Northwestern block contains the original Heartland pilots. The Company has reviewed these pilots in light of the results gained in other offset Evergreen areas and believes it has an opportunity to accelerate dewatering by more effective frac techniques, and has initiated a program to complete shallower "behind pipe" coals underlying the Engelke pilot. Initial completion efforts have yielded strong gas shows from several upper coal intervals.
2005: Phase 2
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The Company has initiated a discretionary 2005 program focused on drilling and establishing gas sales. Depending on results, the Company anticipates a capital program of between $3 - $5 million. The program contemplates drilling and completion of 24-36 new wells, the completion of 6 existing wells, and the construction and tie in of a gathering and sales pipeline. After implementing the Phase two program, depending on results, the Company will have unallocated working capital of approximately $6,000,000.
Richard Coglon, President, said, "We have established a very good framework for evaluating critical elements of this play. We moved rapidly to streamline the organization and redesigned the drilling and completion programs to effectively dewater coals at a very low cost. We have shown that by systematically implementing various modifications in our drilling and completion programs we can significantly reduce costs while increasing production. As a result of such improvements, we remain optimistic that early stage economic production may be achievable." He added, "We have clearly established the right trends. Experience has shown that this is exactly the type of evolution that turns yesterday's marginal play into today's widespread development project." |
