The program yielded 100% drilling success and, as said in April 2009, the company brought on stream over 1,200 boe/d of new production net to the company from a portion (3.0 net wells) of this program.
Offsetting base declines and other operational delays the company expect second quarter of 2009 production to raise by around 800 – 1,000 boe/d. The results of our drilling and completion program have been very successful with the overall play concept de-risked and even enhanced with additional prospects identified and potential added. Our go-forward plan is to continue to focus our investments on maintaining our landholdings and opportunity base while adding low cost production and reserves from this world class resource base.
The company’s multi-layered prospects includes both conventional high productivity sweet gas targets in the Cadotte, Notikewin, Falhers, and Bluesky/Gething and the unconventional sweet tight gas reservoirs in the large, aerially extensive resource targets in the deeper Cadomin and Nikanassin zones.
The company’s winter program also proved up a number of additional low permeability uphole zones that were previously considered uneconomic and are now targeted for development under our resource development plans. The company holds an interest in over 150 gross sections of land on this high potential regionally extensive play extending from Elmworth in the north to West Wapiti, Red Rock, and Bilbo in the south.
In Elmworth, the company concluded the first round of our operated drilling program with three gross (1.7 net) wells targeting the tight gas in the Cadomin and the conventional sands of the Cretaceous. Two of the wells were Cadomin horizontals and the third well was a Cadomin vertical with measured depths of between 2,800 and 3,800 meters. The vertical well came on production in February 2009 and production from the remaining two wells was deferred until April 1, 2009 to take advantage of the royalty incentives. In Elmworth we strategically installed more than 14 kilometers of pipeline (extending from the eastern limit to the western limit of our lands) enabling us to tie-in future drilling and development with minimal cost.
The company results in this area are consistent with our expectations of initial production rates of between three and five mmcf/d per well from various formations including the Cadotte, Falher, Bluesky, Gething zones and the horizontal Cadomin.
The company hold nine gross (5 net) sections in the Elmworth area and have received regulatory approval for downspacing the Cadomin wells to two wells per section. Midnight plans additional drilling in this area in 2009 and downspacing in the future.
In Red Rock, Midnight Oil has three gross (2.3 net) wells producing from various formations from the deeper tight gas reservoirs of the Nikanassin and Cadomin to shallower conventional Cretaceous reservoirs. This winter Midnight completed 1 gross (1.0 net) well (using a limited-entry fracture technique), tied in 1 gross (0.8 net) well and installed 4 km of pipeline to add to our take-away capacity. Midnight holds over 36 gross (31 net) sections (over 26 sections 100% working interest) of mineral rights in the Red Rock area. Future development in this area will target the multi-zone potential of the conventional Cretaceous reservoirs and the multi-layered tight gas resource targets of the Cadomin and the Nikanassin.
In Bilbo, the company operated the drilling of four gross (1.2 net) vertical Nikanassin wells and 1 gross (0.3 net) Cadomin horizontal well. The well was concluded and tied in 2 (0.6 net) of the Nikanassin vertical wells and the 1 (0.3 net) Cadomin horizontal well before spring break-up but held production from these wells until after April 1, 2009. Subsequent to the end of the first quarter Midnight Oil purchased a cased well bore (vertical Nikanassin) located on the farm-in lands that the parties agreed to include as the sixth earning test well drilled under this farmin. Within the Bilbo area we were able to access some pre-existing infrastructure and also constructed over 2 km of pipeline. We plan to complete the three remaining vertical Nikanassin test wells and drill an additional Cadomin horizontal well during the remainder of the year.
In West Wapiti, Midnight Oil drilled one gross (0.5 net) farm-in well on a 17 gross section block that we acquired earlier in 2008. This well was drilled into the Nikanassin at a total depth of 3,700 meters and was completed using a limited entry fracture technique with initial test rates of over 8 mmcf/d.
This well is currently producing through a downhole choke at a restricted rate of 2 mmcf/d due to nearby infrastructure restrictions. With additional pipeline work scheduled later this summer, the company anticipates that it will be permitted unrestricted production into the local gathering system. Given the encouraging results from this well and from wells drilled by other operators in the area we and our 50% partner have elected to drill another farmin well on this block that will begin as soon as surface access permits and all regulatory approvals have been obtained.
