25 Oct 2007 07:00
Bankers Petroleum achieves first natural gas production and sales from the Woodford Shale in Oklahoma
Additional Horizontal Wells Underway to Further Increase Production
CALGARY, Oct. 24 /CNW/ - Bankers Petroleum Ltd. is pleased to provide an operational update for its United States exploration program. In Oklahoma, the Company began selling natural gas and liquids from the Nickel Hill No.1-26 and Greenway 35-1H wells in the last month. Additional horizontal wells are in the process of being tested and drilled in the Ardmore basin to further increase production and sales prior to year-end.
"We're very pleased with the progress we've achieved in the Ardmore basin in Oklahoma," said Wolf Regener, President, Bankers Petroleum (US) Inc. "The Woodford shale looks to be proving itself to be a significant play for the Company, generating good exploration results from the first two horizontal wells drilled on our acreage. Our success has led to us reaching an important milestone in our US exploration strategy: first natural gas production and sales. We expect to be able to continue to improve upon the economics and success of future wells as is quite common in shale plays. We are quite hopeful that we will soon be able to move our Ardmore basin acreage into a development phase in 2008 while we continue to define the potential of the Palo Duro basin."
Ardmore Basin, Oklahoma
The Company's first horizontal Woodford shale well, the Greenway 35-1H well, had an initial production rate of approximately 2.2 mmcfe/d(1). This production, combined with that of the vertical Nickel Hill No.1-26 well, which is currently producing approximately 900 mcfe/d, has been tied-into a gathering system and is being sold through the newly constructed facilities. The Company's respective working interests in these wells are 46 and 75 percent.
Bankers successfully drilled, completed and fracture stimulated the WLC 17-1H well in which it has a 38 percent working interest. Analysis of the vertical pilot hole drilled prior to drilling the horizontal portion of this well indicated a 325 foot thick Woodford shale section that compares favourably with the other wells drilled in the area. The well is currently flowing back after fracture stimulation, having recovered about 59 percent of fracture fluid, and is producing at approximately 2.1 mmcfe/d of natural gas and liquids. In addition, Bankers just completed drilling and has run casing in the horizontal portion of the Brock 9-1H well. The drilling rig is moving to the next well to be drilled on Bankers acreage in this project, the Brock 4-1H well. The results from these initial wells will assist Bankers in creating a commercial development program for 2008.
As Bankers progresses with its drilling program, costs are decreasing significantly from well-to-well. For example, total drilling and completion costs were reduced by approximately 45 percent for the shallower WLC 17-1H well and are estimated to be reduced by approximately 35 percent for the deeper Brock 9-1 well as compared to the Greenway 35-1H well. It is estimated that this will positively impact the economics for Bankers' shale gas development. Bankers is estimating that its drilling costs will be between $2.6 to $3.4 million per well in a development scenario, depending on the depth of the individual horizontal well. In addition, as more is learned about the reservoir, Bankers anticipates that it may also be able to increase the productivity of the wells by fine tuning its fracture stimulation techniques.
Palo Duro Basin, Texas
In Palo Duro, Bankers is progressing with its exploration program in what it considers the core area of the basin, which the Company believes has the best potential productive Bend shale and Granite Wash Sands over its acreage holdings.
The Company is in the process of drilling the horizontal leg of the Cogdell No.64-1 well in the Atoka A, Granite Wash Sand formation, where fracture stimulation of the original vertical wellbore generated encouraging results of approximately 325 Mcf/d. Early results during drilling indicate good natural gas shows from the sand. The well is anticipated to be finished drilling within the next two weeks.
The Black 4No.1 well targeted what was perceived to be a more thermally mature portion of the basin. Initial results have had limited natural gas flows from some sand intervals; the well is currently shut-in for pressure build-up tests. A fracture stimulation of the Bend shale interval is being planned that incorporates new techniques recommended by CoreLabs.
A basin-wide core study is in the final stages of being completed by CoreLabs that incorporates all core, log, fracture and production data from all previous wells drilled that Bankers has access to. The analysis of the cores taken in the Palo Duro basin wells has confirmed that the rocks contain substantial volumes of gas and have some unique rock properties that may require different stimulation/completion techniques than those commonly used in other shale basins. Bankers believes that the application of these techniques, together with focusing on the more thermally mature portion of the basin, will positively affect future production rates from the Bend shale formation. Additional tests are currently being done on the whole cores from the Burleson Ranch well to further clarify the findings and to determine fracture fluid incompatibilities that may have caused some of the previous performance issues.
Bankers' near-term goals for the Palo Duro basin are: to improve on prior results from the previously drilled vertical wells, which will also show repeatability; and to utilize horizontal wells to attempt to dramatically increase production rates over vertical well rates. Further exploration and development activities will be influenced by the results of these wells.
-------- Q3 Conference Call:
A conference call to discuss the third quarter results will be held Friday, November 9 at 9:00 a.m. MDT, 11:00 a.m. EDT, 4:00 p.m. BDT. To participate in the conference call, please dial 1-800-594-3615 or 1-416-644-3426 approximately 10 minutes prior to the call. A live and archived audio webcast of the conference call will also be available on Bankers' website at www.bankerspetroleum.com.
Caution Regarding Forward-looking Information
Information in this news release respecting planned work programs on the Company's US properties and anticipated results of such programs constitutes forward-looking information. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results and are believed to be reasonable based on information currently available to the Company.
Exploration for natural gas is a speculative business that involves a high degree of risk. Few wells that are drilled are ultimately developed commercially. There is no assurance that expenditures made by the Company on its US properties will result in discovery of commercial qualities of natural gas.
Forward-looking statements and information are based on assumptions that financing, equipment and personnel will be available when required and on reasonable terms, none of which are assured and are subject to a number of other risks and uncertainties described under "Risk Factors" in the Company's Annual Information Form and Management's Discussion and Analysis, which are available on SEDAR under the Company's profile at www.sedar.com.
There can be no assurance that forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Readers should not place undue reliance on forward-looking information.
Review by Qualified Person
This operations update was reviewed by Richard Wadsworth, President of Bankers Petroleum Ltd., who is a "qualified person" under the rules and policies of AIM in his role with the Company and due to his training as a professional petroleum engineer with over 14 years experience in domestic and international oil and gas operations.
About Bankers Petroleum Ltd.
Bankers Petroleum Ltd. is a Canadian-based oil and gas exploration and production company focused on opportunities in unconventional petroleum assets. Bankers holds interests in four prospects in the Northern and Central regions of the United States, where it is currently pursuing the exploration of shale and tight gas sand plays. It also operates in the Patos-Marinza oilfield in Albania pursuant to a license agreement, producing heavy oil. Bankers shares are traded on the Toronto Stock Exchange and the AIM Market in London, England under the ticker symbol BNK.
----------------------- (1) mcfe/d is calculated as daily production of gas in thousand cubic feet (mcf) at standard conditions plus daily liquid production volume in barrels (bbl) converted to mcf at a ratio of 1 bbl equal to 10 mcf, which is based on the approximate pricing ratio of the gas and liquids. For further information: Susan J. Soprovich, VP, Investor Relations andCorporate Governance, Ph: (403) 513-2681, Email:investorrelations(at)bankerspetroleum.com, Website: www.bankerspetroleum.com;AIM NOMAD: Ryan Gaffney, +44 20 7050 6777(BNK.)
BANKERS PETROLEUM LIMITED