CLK! Here is a look at the most recent newsletter about to hit the streets...good reading!
Regards!
Fat Albert!
New gas discovery
Reserves keep growing
3D seismic completed
Five new pipelines planned
Gas flowing from 'record' well
Dear Friend of Dynamic Oil:
These are truly great times for our company. Wonderful things are happening -- and the pace is picking up speed. Here's the latest news.
Gas flows from rich, bountiful, St. Albert
For the past several weeks, gas has been flowing from our St. Albert property to the ATCO processing facility at Carbondale, Alberta, through the new 6 inch, 10 mile natural gas pipeline we constructed.
Production rates started at 5.0 million cubic feet per day (Mmcf/d) and increased to 10.0 Mmcf/d within a few days, as the plant adjusted to the stream of new gas. As of this writing, the well was delivering in excess of 12.0 Mmcf/d, and we'll soon be testing the maximum plant capacity of 16.0 Mmcf/d.
Ostracod gas on stream
Gas from the Ostracod zone is now on stream. Three of four standing Ostracod wells have now begun production, and the fourth is scheduled to begin delivery this summer.
Two additional Ostracod wells are planned for completion or drilling before the end of September. Production from the first four wells is expected to rise from 3.5 to 4.0 Mmcf/d as maximum rates are reached.
New discovery at St. Albert (yes, yet again!)
First a recap.then the NEW news:
You'll remember, last summer, Dynamic announced the test numbers for one of the largest gas wells ever measured in Western Canada. St. Albert (06-01), 50% owned by Dynamic, had an absolute open flow (AOF) potential of 118 Mmcf/d at surface.with sand face (down hole) AOF calculated at an incredible 296 million cubic feet per day.
Then during an astonishing six week period, between December 19, 1997 and February 11, 1998, Dynamic announced three new discoveries -- with "new pool" original gas-in-place reserves totaling 17.0 billion cubic feet. Allowing for reservoir factors, this amounts to 14.8 Bcf of proven recoverable gas reserves.
Now comes our newest discovery, announced on March 27: Our fourth St. Albert "new pool" discovery amounts to 9.0 Bcf of original gas-in-place, or 7.7 Bcf of proven recoverable reserves.
Here are further details of these St. Albert announcements:
(This table would not convert properly in here (SI))
Announcement----Proven Recoverable----Est. ProductionRates---Source zone Date---------------(Bcf)------------------(Mmcf/day)------------------------------- Dec 19, 1997--4.1-----------------4.0---------------------Basal Quartz------------- Jan 12, 1998--4.6-----------------1.2------------------LowerGlauconite
Feb 11, 1998--6.1-----------------3.5------------------Viking---------
Mar 27, 1998--7.7-----------------3.5------------------UpperGlauconite
TOTAL---------22.5---------------12.2------------------Cretaceous
The above reserve estimates are gross reserves before royalties, in which Dynamic has a 50% working interest.
Keep in mind, this added deliverability should make our earlier estimate of
1,500 barrels of oil equivalent per day (boe/d) quite conservative.
3D seismic program
Dynamic and its partner have just completed a 12 square mile 3D survey on their St. Albert property. Results from the survey will be used to evaluate additional Devonian -aged oil potential. The property is currently producing about 160 barrels of oil per day (Dynamic 25%) and has already produced more than 20 million barrels since the late 1950s.
With our estimate of 15% - 20% of the oil remaining to be found, we believe there is huge potential for further development.
New pipelines
Five new 'flowlines' have been surveyed at St. Albert, each being from one to
one-and-a-half miles in length. Four of these gas lines will run from our newly completed wells, while the fifth, an oil line, will transport current production to our St. Albert battery.
Newby/Gypsy Lake
We have completed our geochemical fieldwork this winter at Newby/Gypsy Lake,
and have picked eight potential drilling locations for the winter of 1998/99.
We had hoped to get started drilling this past winter, but we were foiled by El Nino. This was the mildest, shortest winter operating season in memory, and we ran out of time. Remember, the ground must be frozen solid for us to operate in parts of the area that are generally soft and mushy.
RECAP: Dynamic is seeking to develop shallow gas reserves over 24,960 acres
in northeast Alberta which may prove to be an extension of the existing Newby gas field.
This area has proved to be incredibly rich, currently consisting of 120 wells producing 57 million cu.ft./day. Since 1983, production has totaled 141 billion cubic feet. The Alberta Energy Utilities Board recognises original gas in place of 345 billion cubic feet.
Dynamic currently owns a 1/3 interest in 5,760 acres in the Newby/Gypsy Lake area and plans to increase it's interest to 50% in these lands by drilling later this year. Dynamic also has the right to earn a 30% interest in a further 30 sections (19,200 acres), by paying 60% of the drilling costs of one commitment well and 60% of the drilling costs in up to eight option wells. Some of these wells directly offset existing production.
Two Creeks project
We've been asked about our Two Creeks project (Dynamic 72%). I can report that we have surveyed a flowline from the well to a nearby gathering system, and expect to lay that line as soon as the ground can be worked. Once connected, the line should begin delivering gas at about 750,000 cu.ft./day. This gas, very rich in natural gas liquids, will be processed on a contract basis at a facility owned by Summit Resources Limited.
Demand for oil vs. gas: The big difference
While our name is Dynamic "Oil," you'll have noticed that our greater focus has always been on natural gas. Increasingly, this is proving to be the wiser, more prudent course.
On the one hand, oil prices have been dropping as new production comes on to the market. The economic depression in Asia, and Iraq's return to full-scale production (with the world's second-largest oil reserves) will accentuate this trend.
On the other hand, demand for natural gas is surging in the United States. (U.S. consumption in 1990 was 18.7 trillion cu.ft..growing to 24 tcf by the end of next year.) Recent reports in the media have suggested that a supply crunch is looming as more gas is needed to meet demand.
With St. Albert now the focal point of our activity, we're now moving out in other directions in the Canadian prairies. Are we looking for another property like St. Albert? YOU BET!
Yes, our name continues to be Dynamic "Oil," -- but increasingly, the North
American energy industry is thinking of us as Dynamic GAS.
I'll have more news for you before long. Meanwhile, you can stay in touch
through our website -- www.bluecrow.com/dynamic. Or, if you'd like, please
call Troy Winsor or Rick Langerud at 1-800-663-8072 -- between 6:00 a.m. and
4:30 p.m. Pacific Time.
Sincerely,
Wayne J. Babcock
President
P.S. A lot of people commented on the note in our last newsletter about 'St. Albert' being the patron Saint of scientists. During his lifetime students and friends referred to him as 'St. Albert the Great' because of his great knowledge and skill as a teacher.
Well, we've found so much new gas, and learned so much about the property, that around the office we now call the property (not the Saint), 'Fat Albert'!
Certain statements herein may not be historical facts and may be "forward-looking statements' under U.S. securities laws. Such statements are based on management's beliefs, as well as assumptions made by information currently available to management. Forward-looking statements include those preceded by the words "believe", "estimate", "expect", "intend", "will" or words of similar expressions, and include reserve estimates of future production, costs per barrel equivalent, commencement of operations and cost savings. Forward-looking statements are subject to risks, uncertainties and other factors that could cause results to differ materially from expected results. Those listed are not exclusive. Reserve estimation is an interpretive process based on drilling results and past experience as well as estimates of reservoir characteristics and flow rates, prices, costs of extraction and processing, capital expenditures and many other factors. Actual quality and characteristics of oil and gas accumulations cannot be known. |
