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Gold/Mining/Energy : Coalbed Methane (CBM) Corral -- Ignore unavailable to you. Want to Upgrade?

To: johnlw who wrote (248)	10/12/2007 2:29:59 PM
From: johnlw	Respond to of 365

RIX has answered my question in their last release: Richards Oil expects October production of 215 boepd 2007-09-27 15:16 MT - News Release Mr. Brad Turner reports RICHARDS OIL & GAS LIMITED PROVIDES UPDATE ON ITS ARDLEY AND HORSESHOE CANYON DRILLING RESULTS Richards Oil & Gas Ltd. is continuing drilling and testing activities on its Lambert, Ansell and Marsh properties, and is making progress toward proving the commercial production potential of its Ardley coalbed methane (CBM) exploration opportunity. The company is also adding production from 13 gross (7.6 net) Horseshoe Canyon CBM wells at its Morningside, Lacombe and Thorsby properties. With the addition of these new wells, net production in early October, 2007, is estimated to stabilize at 215 barrels of equivalent oil (boe) per day, up 101 boe per day or 89 per cent from the second quarter 2007 production rate. Ardley update Activities for the third quarter of 2007 included: * Drilled one horizontal well on the company's Ansell property, using an experimental, dry, inbalanced drilling process. The company achieved a 50-metre horizontal leg into the Ardley coals which has shown reservoir pressure and potential gas flow rates similar to the 500-metre horizontal leg drilled at the company's Marsh property, indicating the potential for a commercially viable multilateral well; * Drilled two vertical wells on the company's Lambert property which have demonstrated dry coal seams capable of gas production, indicating that this additional area has potential for a horizontal drilling program; * Re-entry, cleanup and flow measurement of the previously drilled horizontal well on the company's Marsh property demonstrated reservoir pressure buildup and improved flow of gas compared with the initial testing done in early 2007; * A new stimulation technique that has the potential to significantly reduce stimulation costs for future CBM development programs was used at a previously drilled Lambert area well. This new stimulation technique did not achieve the desired result in this first application and the company is continuing to work to prove the viability of this new stimulation technique. Fourth quarter 2007 plans for the company's Ardley CBM exploration opportunity are to drill additional multilateral horizontal legs in the Ansell well using an inbalanced mist system to increase wellbore length and production. It is anticipated that this well will then be tied into a low-pressure pipeline that is in close proximity to allow for long-term flow testing and analysis. The company has earned a further 18 sections of land (13.1 net) in Ardley through 2007 drilling activity and now has 41 sections earned (23.9 net) and 24.5 sections under option (12.9 net). The company's earned and optioned lands in the Ardley coals contain approximately one trillion cubic feet of gross in situ CBM natural gas resource. Allowance for net working interest position and the resource evaluator's assumptions of likely horizontal well development based on select coal seams within the Ardley, result in a discovered resource base of 136 billion cubic feet of natural gas net to Richards Oil & Gas. Horseshoe Canyon update The company has over 100 (gross) potential drilling locations at its four Horseshoe Canyon development plays at Morningside, Lacombe, Thorsby and Crossfield. Morningside The company has tied in the seven Horseshoe Canyon wells (five net) that were drilled prior to 2007. These wells are expected to be on production in early October and produce over 400,000 cubic feet per day net to the company. The company plans to drill and tie in five additional wells before year-end. Year-end production from this area is anticipated to be 800,000 cubic feet per day. Lacombe The company drilled and tied in five gross wells (2.1 net) that went on production during September. The company plans to drill and tie in three (gross) additional wells by year-end. The company currently has 16 (gross) Horseshoe Canyon wells on production, producing 500,000 cubic feet per day net to the company. Thorsby The Horseshoe Canyon well that was drilled and stimulated in February, 2007, was brought on production in August. The well is currently producing at greater than 100,000 cubic feet per day. The company has interests in 4,640 gross acres of land and a 30-per-cent interest in the gas sales pipeline in the Thorsby area. Crossfield The company drilled and completed the Horseshoe Canyon coals in one well at Crossfield in July and has stimulated the coals and the sands in the original development well drilled in the fall of 2006. Flow testing is currently under way and initial results appear to be similar to the company's other Horseshoe Canyon wells with the added potential for natural gas production from the co-mingled sands. Other property update Gadsby Production from two of the three wells in conventional gas zones continued to decline and produce water. Current net production from this area is 250,000 cubic feet per day net to the company. Enhanced recovery equipment continues to operate on two of the wells and the company is evaluating the use of low-horsepower compression to enhance gas production. In that the company has existing pipeline infrastructure and the Mannville coal is the main target formation at Gadsby, a test of the Mannville coals in one of the company's existing wellbores will be performed before year-end, which will include stimulation and flow testing. Silverdale, Lone Rock and Manitou Lake Net production from these non-operated heavy oil properties is 13 barrels of equivalent oil per day, down from 17 boe per day in early 2007. A recent pump change on the Lone Rock well has improved production by 35 per cent and the Manitou Lake well has been suspended as uneconomic. The company is reviewing additional drilling potential in the Silverdale and Lone Rock areas with the operators given their undeveloped land base and seismic coverage, in response to recent offset activity. Net production from these areas is anticipated to be 10 boe to 13 boe per day for the remainder of 2007. Summary The economic impact to the company of the recently released Alberta royalty review report is expected to be favourable to neutral given the production levels typically of the company's Horseshoe Canyon CBM wells. Regardless of whether the Alberta government accepts the recommendation from the royalty review panel, the company continues to execute its plan of taking advantage of the lower cost and improved availability of field services to increase production from its Horseshoe Canyon properties while working to prove up the large resource potential of the Ardley. The company will continue to secure additional land interests in its operating areas, pursue additional large CBM resource plays and review corporate opportunities. All of these activities are consistent with the company's strategy to capitalize on CBM opportunities that create both short-term cash flow and long-term value for its shareholders. We seek Safe Harbor.