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GBE.v Grand Banks
Grand Banks provides updates on exploration projects
2005-10-18 14:15 ET - News Release
Mr. E.C. McFeely reports
GRAND BANKS PROVIDES OPERATIONAL UPDATE
Edward McFeely, chairman, president and chief executive officer of Grand Banks Energy Corp., is providing an operational update on recent activities and developments.
Williston basin core area
Grand Banks has been engaged in an active drilling program in southeast Saskatchewan and Manitoba since early August, using a drilling rig that has been contracted until at least the spring of 2006. The first well of the program was spudded Aug. 3, 2005, at Kingsford, Sask. (Twp. 4 Rge. 7 W2M). This was a 100 per cent Grand Banks horizontal well targeting light crude oil in the Midale Marly beds immediately adjacent to the Steelman Midale unit No. 2. An open-hole section of 650 metres was drilled and brought on production Sept. 7, 2005, at flush oil production rates of over 200 barrels per day. Oil production from this well has stabilized at rates in the 175-barrel-per-day range with water cuts of 15 per cent. A second, vertical well (net interest 28.6 per cent) was drilled a half mile to the south as part of a farm-in commitment to earn lands, confirm reservoir quality and establish pool extent. The vertical well encountered a good oil column in the Midale beds and has been placed on production at gross oil rates of about 20 b/d. More importantly, the results of this well have provided data that establishes a minimum of three additional horizontal locations (two at 100 per cent and one at 52-per-cent net working interest). The first of these locations was spudded on Oct. 15.
On Aug. 26, 2005, Grand Banks spudded the first of a five-well program on its Bakken/Three Forks play in the Sinclair area of southwest Manitoba. The program consisted of three vertical step-out delineation wells and one horizontal well offsetting the company's discovery well in the play located at 14-11-7-29W1. A fifth well targeting Bakken/Three Forks light oil was drilled about nine miles northeast of these wells just on the Saskatchewan side of the provincial border. All of these wells were cased and are in various stages of completion, testing or initial production.
Grand Banks has garnered significant information respecting the play with the completion of its initial drilling program and plans to return the drilling rig to Manitoba to drill approximately 12 (mostly exploratory) Bakken/Three Forks wells before spring breakup in 2006. These wells will be drilled to prove-up reserves and define reservoir extent across Grand Banks acreage. Each successful well will set up as many as eight additional 40-acre step-out locations. Future development drilling programs will be guided by the results of this program.
High-impact gas exploration
Grand Banks Energy Corp. is the operator of a joint venture for the drilling of up to two 3-D seismically defined deep Devonian gas prospects on a 19-section block of interest lands in the Harley (Tower Creek) area, about 30 miles northwest of the town of Hinton, Alta. A well licence was issued on Oct. 7 for the drilling of a 5,000-metre Leduc gas test at 2-21-55-27 W5M. Grand Banks is in the final stages of making the arrangements for the drilling of this well, which is expected to spud before the end of the year or early in 2006, depending on rig and casing availability. Grand Banks will pay 15 per cent of the gross costs (estimated at $13-million) to drill the 2-21 test well that will target a Leduc pinnacle reef. Analog Leduc pools in this region typically commence production at gross raw gas production rates of 25 million cubic feet of natural gas per day or more with reserves in the 20 to 50 MMcf/g range.
A second prospect on the Harley lands is prospective for sweet Wabamun gas at a depth of about 4,500 metres. Grand Banks and its partners will have an option to drill this location after the first well is completed. Successful Wabamun producers from this type of reservoir typically commence production at gross raw rates of 10 to 30 MMcf/g with reserves in the five billion to 15 billion cubic feet of gas range.
A high-impact Wabamun test has been recently spudded in the Saddle Hills area at 13-21-76-9 W6M (Grand Banks pays 15 per cent of the costs for a 9.75-per-cent working interest in the well). This well is expected to reach total depth around the end of October. Successful Wabamun producers in the same area have initial gross raw gas production rates in the 10 MMcf/g range with reserves of up to 15 bcf per well.
Grand Banks has entered into a farm-in agreement for the drilling of a Kiskatinaw test in the Mulligan area of the Peace River Arch. The corporation will pay 27.5 per cent of the costs of drilling, casing and evaluating the zone to earn an 18.5-per-cent interest in the well. Successful Kiskatinaw producers in the area can produce at initial gas rates up to 10 MMcf/g with gross reserves in the five to 10 bcf range. The Mulligan well is expected to spud in November.
Grand Banks will also participate in the drilling of a Nisku test in the Brazeau area of west-central Alberta that is also expected to spud during November. The well will target Nisku sour gas at a depth of around 3,700 metres. Grand Banks will pay 15 per cent of the costs of drilling, casing and completing for a 9.75-per-cent working interest in the well. Successful Nisku producers in the same area have initial raw gas production rates in the 10 to 15 MMcf/g range with gross reserves of up to 30 bcf per well.
Grand Banks also participated in the drilling of a Banff test during the third quarter (at a 15-per-cent working interest) in the Ferrier area with the result being dry and abandoned.
Grand Banks projects its third and fourth quarter production volumes will average in the 900-to-1,000-barrel-of-oil-equivalent-per-day range, with 2005 exit volumes (as before) projected between 1,000 and 1,300 boe/d. Grand Banks Energy currently has about $1-million in working capital and no debt drawn against a credit line of $5.4-million. The corporation has 28 million shares outstanding, and 30.4 million shares fully diluted. Grand Banks also possesses over $38-million in tax pools that can be used to shelter income from successful exploration and development projects.
Grand Banks Energy will present at the SEPAC (Small Explorers and Producers Association of Canada) investment symposium to be held in Calgary on Oct. 31, 2005, at the Westin Hotel. Concurrently, the company will load an updated corporate presentation onto its website.
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