Delta Petroleum Corporation Provides Update on Operating Activities and Schedules Third Quarter Earnings Release and Conference Call
13:23 EST Tuesday, October 31, 2006
DENVER, Oct. 31 /PRNewswire-FirstCall/ -- Delta Petroleum Corporation (Nasdaq: DPTR), an independent energy exploration and development company ("Delta" or "the Company"), today provided the following update regarding its production, drilling and other operating activities. The Company also announced that it will host a conference call at 12:00 Noon (Eastern Time) on Wednesday, November 8, 2006, to discuss its third quarter operating results and the outlook for the balance of 2006.
OPERATIONS UPDATE - NEW DRILLING VENTURES
Paradox Basin, CO and UT, 70% WI -- The Company has reached total depth on the Salt Valley State 25-12, the Greentown State 36-11, and the Greentown State 32-42. The Salt Valley State 25-12 has been completed in approximately one-third of the potential pay intervals, and the remaining completion activities should be finished within the next 3 to 4 weeks.
The Company has perforated the first interval in the Greentown State 36-11 as part of a multiple-zone, multiple-stage completion. During post-frac flow back, the well encountered unexpectedly high pressures that exceeded the rated limits of the wellhead equipment, thereby causing the well to produce in an uncontrolled situation. Flow rates were estimated to have exceeded 12 million cubic feet of gas equivalent per day (Mmcfe/d) from less than 15% of the projected productive intervals. Company personnel worked in conjunction with a leading well control company and contained the well over the next five days without property damage and without injury. Subsequent production testing indicates that the well will produce at a stabilized rate of 3.8 Mmcfe/d from this interval alone. Additional intervals will be tested over several weeks.
Completion efforts are expected to begin soon at the Greentown State 32-42, which is located seven miles south of the Greentown State 36-11. The Company plans to construct a gas pipeline and gathering system to access the Greentown and Salt Valley project areas.
The Company is currently permitting four new locations at the Greentown Prospect, two at the Salt Valley Prospect and two at the Gypsum Valley Prospect. Further drilling should resume in November.
Central Utah Hingeline Project, UT, 65% WI -- The Company has received a federal drilling permit for the Joseph Federal #1, and the drilling location is currently under construction. The Company will have a 32.5% working interest and will operate the drilling of the first well on the Joseph structure which should spud within the next week and will target the Navajo sandstone. On the remaining acreage the Company will have a 65% working interest and operate all wells.
Columbia River Basin, WA -- The Anderville Farms 1-6 (non-operated) reached total depth in August, and completion activities have commenced. A second non-operated well, the Anderson 11-5, is currently drilling and should reach total depth later this fall. A third non-operated well, the Brown 7-24, has been permitted and is expected to spud within the next several months. The Company is also in the process of permitting three operated wells with the expectation that drilling should begin in the second quarter of 2007.
OPERATIONS UPDATE - DEVELOPMENT PROJECTS
Newton Field, SE Gulf Coast, TX, 100% WI -- The Company has reached total depth on the James Gray #1 and the James Gray #2 on a seismically defined Wilcox structure north of the Newton Field. The James Gray #1 is continuing with completion efforts to test the Lower Wilcox sands and the same Upper Wilcox sands that define the producing intervals in the Newton Field. The James Gray #2 is a confirmation well located one mile to the east of the James Gray #1 and will begin the completion process within the next few weeks.
In addition, the Company has identified another large structural feature to the northwest of the Newton Field that will also target the Lower and Upper Wilcox sands. The Company is currently drilling the George Wood #1 on this feature and should reach total depth within 10 days. DHS rig #10 will be transferred back to the Newton Field while these two structural features are being evaluated.
During the last week of August, an explosion caused the temporary loss of one of the Newton Field water disposal facilities. There were no injuries or environmental spills as a result of the accident, but oil and gas production was curtailed for a period of two weeks in a major portion of the field as the facilities were being rebuilt. Additional water disposal capacity has since been added to minimize the potential for production downtime in the future.
Vega Unit, Piceance Basin, CO, 100% WI -- The Company continues its development program in the Vega Unit and surrounding leasehold with DHS rig #5. The Collbran Valley Gas System ("CVGS") pipeline and processing plant will be completed and operational within a week. The Company expects to connect production from the Vega Unit and have first sales through CVGS by mid-November. A second DHS drilling rig has been dedicated to the development of the field, which currently has 11 wells waiting on completion and 7 new wells that are producing at restricted rates.
Garden Gulch Field, Piceance Basin, CO, 18.5% WI -- The operator has now completed 20 wells, which are producing at a combined gross rate of approximately 18 million cubic feet (Mmcf) of gas per day. The field is currently being developed with two drilling rigs, and the operator plans to have three drilling rigs in the field before year-end.
Howard Ranch Area, Wind River Basin, WY, 50-100% WI -- The Company has recompleted two of its producing wells in the shallow Lower Fort Union formation. Production results to date have been very encouraging and warrant further development. New wells to the Lower Fort Union should be considerably less expensive than previous wells in the Howard Ranch area. The Company plans to drill several additional wells in 2007.
After completion of its artificial fracture simulation study of the Lance and Mesaverde sands, the Company has concluded that current artificial fracture techniques do not allow for economic development of the deeper sands. Although these formations contain a significant amount of gas, further improvement in the economics of drilling the deeper tests will be necessary before additional deep activity can be considered.
Midway Loop Area, SE Gulf Coast, TX, ~ 10% - 55% WI -- The Company completed the BP America Delta #1 (55% WI) in early August and encountered high initial production test rates before the southern lateral of the well collapsed. A drilling rig is on location to re-drill the southern lateral, which is expected to take approximately 45 days. In addition, the Company has spud the Simmons A70 2H (50% WI) which is a direct west offset to the Best Kenneson Willsource #1. This well should be drilled and completed in 90 days.
Opossum Hollow, Central Gulf Coast, TX, 98% WI -- The Morrill Sligo #1 is being returned to production and should be selling gas from the Sligo by mid-November. The uphole Edwards and Pearsall formations, which were secondary objectives, have been tested and found to be uneconomic at this location.
Washington County, Denver Julesburg Basin, CO, 100% WI -- Lower gas prices will cause an impairment in asset valuations on the Company's balance sheet of approximately $10 million. However, the Company is planning a new development program, including six to eight new wells by year-end, based on a revised geologic model and a new drilling technique that should allow for lower well costs.
ACQUISITIONS AND DIVESTITURES
As part of the Company's ongoing asset rationalization activities, Delta has engaged Tristone Capital to market a package of non-core properties. The assets are located in Texas and New Mexico and currently produce approximately 6 Mmcfe (net) per day from 200 wells. The properties do not include any wells located in the Newton, Opossum Hollow or Caballos Creek fields.
PRODUCTION GUIDANCE UPDATE
Previously the Company announced production guidance for the quarter ended September 30, 2006 of between 4.2 and 4.4 billion cubic feet equivalents (Bcfe). Production for the quarter is now expected to be 4 Bcfe. The shortfall, relative to earlier expectations, largely resulted from unexpected production downtime in the Newton Field as referenced above.
OTHER BUSINESS
Effective October 6, 2006 Mr. Randy Arnold, Senior Vice President of Operations, resigned from the Company. The Company appreciates Mr. Arnold's considerable contributions over the past four years and has initiated a search for his replacement.
EARNINGS RELEASE AND INVESTOR CONFERENCE CALL
Delta Petroleum Corporation has a conference call for 12:00 noon EST on Wednesday, November 8, 2006, to discuss its operating results for the quarter and nine months ended September 30, 2006, and the outlook for the balance of 2006. The Company's third quarter earnings will be released before the market opens on November 8, 2006.
Shareholders and other interested parties may participate in the conference call by dialing 800-562-3356 (international/local participants dial 973-582-2700) and referencing the ID code 8062434, a few minutes before 12:00 noon EST on November 8, 2006. The call will also be broadcast live on the Internet at videonewswire.com or can be accessed through the Company's website deltapetro.com. A replay of the conference call will be available two hours after the completion of the conference call from November 8, 2006 until November 15, 2006 by dialing 877-519-4471 (international/local participants dial 973-341- 3080) and entering the conference ID 8062434. The call will also be archived on the Internet through February 7, 2007 at videonewswire.com.
Delta Petroleum Corporation is an oil and gas exploration and development company based in Denver, Colorado. The Company's core areas of operations are the Gulf Coast and Rocky Mountain regions, which comprise the majority of its proved reserves, production and long-term growth prospects. Its common stock is traded on the NASDAQ Global Market under the symbol "DPTR."
Forward-looking statements in this announcement are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based on management's present expectations, estimates and projections, but involve risks and uncertainty, including without limitation, uncertainties in the projection of future rates of production, unanticipated recovery or production problems, unanticipated results from wells being drilled or completed, the effects of delays in completion of gas gathering systems, pipelines and processing facilities, as well as general market conditions, competition and pricing. Please refer to the Company's report on Form 10-KT for the period ended December 31, 2005 as filed with the Securities and Exchange Commission for additional information. The Company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
For further information contact the Company at (303) 293-9133 or via email at
info@deltapetro.com
OR
RJ Falkner & Company, Inc., Investor Relations Counsel, at (800) 377-9893 or
via email at
info@rjfalkner.com
SOURCE Delta Petroleum Corporation
For further information: Delta Petroleum Corporation, +1-303-293-9133, info@deltapetro.com; or RJ Falkner & Company, Inc., Investor Relations Counsel, +1-800-377-9893, info@rjfalkner.com, for Delta Petroleum Corporation
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