Cirrus Energy Corporation announces planned 2010 drilling programme and
Netherlands operational update

CALGARY, March 31 /CNW/ - Cirrus Energy Corporation (TSXV: CYR) is pleased to provide the following operational update regarding ongoing activities in our wholly owned subsidiary, Cirrus Energy Nederland B.V. ("Cirrus") in The Netherlands.

    
    2010 Drilling Programme
    -----------------------
    

Following receipt of partner approvals, Cirrus has exercised its option to use the Noble Lynda Bossler jackup drilling rig for a minimum commitment of 120 days at a rate of US$89,500 per day for the drilling of two offshore wells. The rig contract commences on April 1, 2010 and there is an option to extend the term for an additional 120 days at the same day rate. Firm wells planned for Cirrus' 2010 offshore drilling programme are M01-04 and M07-07.

M01-04 (Cirrus 47.5%, operator)

The first well in the 2010 drilling programme is the M01-04 well which will be drilled on the M01-Delta prospect in the M01a licence. This is an exploratory well in close proximity to Cirrus' M01-A gas field. The primary reservoir target is a Triassic-aged Bunter sandstone in a structural closure mapped on 3-D seismic. Cirrus' internal estimate of chance of success is 55% with a most likely gross, unrisked, recoverable resource potential of 71 Bcf.

The well is expected to spud in mid-April with an estimated duration of approximately 50 days to reach total planned depth of 4,000 meters. Estimated drilling cost (excluding the cost of testing) is approximately C$18.0 million gross (C$8.5 million net to Cirrus).

Partners in the well are the Dutch state participant, EBN B.V. (50%) and Energy06 Investments B.V. (2.5%).

M07-07 (Cirrus 42.75%, operator)

Following the drilling of M01-04, the rig will be moved to the M07-A production platform to drill the M07-07 well. This deviated appraisal well will be drilled from the platform to a Jurassic sandstone target which was previously tested in the M07-05ST well drilled in 1996. The M07-05ST well encountered thin, poor quality Jurassic sands, approximately 2m net thickness and which tested gas at 1.2 MMscf/d, at the updip and thinned edge of a sedimentary wedge. The M07-07 well is designed to encounter the equivalent Jurassic sandstones in a down flank location where an increased thickness of sand is expected to be developed. Cirrus' internal estimate of chance of success is 57% with a most likely gross, unrisked, recoverable resource potential of 31 Bcf.

In the event of success, M07-07 will be completed as a production well and immediately tied-in to the existing M07-A field gas export infrastructure. Ongoing gas production from the independent, developed M07-A Triassic reservoir is expected to continue during the M07-07 drilling operations.

The M07-07 well has an estimated drilling time of 53 days to reach total planned depth of 4,185 meters (2,950m TVD). Estimated drilling cost (excluding the cost of completion and testing) is approximately C$19.0 million gross (C$8.1 million net).

Partners in the well are the Dutch state participant, EBN B.V. (50%), TAQA Offshore B.V (5%) and Energy06 Investments B.V. (2.25%).

MSG-03 (Cirrus 57% pre-farmout, operator)

The MSG-03 deviated well is planned to be drilled from an onshore surface location to test the offshore Q16-Alpha prospect. The primary reservoir target is a Triassic-aged Bunter sandstone in a structural closure mapped on 3-D seismic. Cirrus' internal estimate of chance of success is 65% with a most likely gross, unrisked, recoverable resource potential of 29 Bcf. Planning is well advanced with a rig site location identified near to Rotterdam and an option on a suitable land rig has been secured. Subject to final site and partner approvals, this well is expected to be spudded in the third quarter, 2010.

The MSG-03 well has an estimated drilling time of 56 days to reach total planned depth of 5,050 meters MD. Estimated drilling cost (excluding the cost of completion and testing) is approximately C$16.2 million gross (C$9.3 million net, pre-farmout).

Prior to farmout (terms of which are under negotiation), partners in the well are the Dutch state participant, EBN B.V. (40%) and Energy06 Investments B.V. (3.0%).

    
    Production Operations
    ---------------------
    

M07-A Field (Cirrus 42.75%, operator)

Production performance of the developed M07-A Bunter reservoir continues on expectation with average gross production for February 2010 of 23.4 MMscf/d at a flowing wellhead pressure of 3550 psig. A total of 3.9 Bcf has been produced since production started on September 14, 2009. Given the available excess capacity of the M07-A01 production well, discussions are underway with the operators of the L09-FF processing platform and the export trunk pipeline to increase available ullage for M07 gas and it is considered likely that production rates can be increased during 2010.

L08-D Field (Cirrus 25.5%, operator)

Since production start on October 4, 2009, the L11b-A06 production well has produced a cumulative 2.1 Bcf and is currently producing at a gross average rate of 8.0 MMscf/d against a pipeline pressure of 1,330 psig.

A Front End Engineering and Design (FEED) study has been completed to evaluate options to make compression available for the L08-D field. This study concluded the most cost effective way is to overhaul and re-activate the available compression facilities already installed on the L11b platform. Detailed engineering has started to allow compression to be available by year-end 2010. Compression will then allow the flowing wellhead pressure to be lowered from current 1,330 psig to 435 psig, with an option to further reduce the flowing wellhead pressure to 145 psig at a later stage.

Field testing work was completed on the L11b-A06 well in early March and the results of this work are being interpreted and integrated into a field development plan at the present time. The key finding from the field work was that all three perforated gas sands are contributing to production in approximately the proportions expected. Furthermore, there is no evidence of near wellbore damage. It is currently assumed that the most likely cause of the more rapid than expected initial production decline from the well is due to partial compartmentalization of the reservoir resulting from changes in reservoir facies and/or minor faulting.

From comparison to the now depleted adjacent L11b-A analogue field, there are two important factors to note:

    
    -   The five production wells drilled on the L11b-A field all had very
        different production performances depending on their location within
        the field. Despite this, it appears that an estimated overall 60%
        recovery of the petroleum in place in the principal reservoir sand
        was achieved over a 24 year field life.
    -   Four of the five wells demonstrated variable but generally high
        initial decline rates but once stabilised went on producing at very
        low decline rates for many years as "distant" gas reached the
        wellbore. The fifth well did not produce any gas.
    

It is expected that future production wells on the L08-D field are likely to exhibit the same variability in both short term and long term production performance.

Preliminary indications are that the original estimates of petroleum-initially-in-place (323 Bcf gross) for the L08-D field are likely to remain similar to as originally stated. To achieve efficient recovery of this gas, however, it appears likely that future development wells may be drilled with a high angle or horizontal component to achieve communication with more of the gas in place and hence improve recoveries. Work is currently underway to redesign the A07Z well and, subject to a final drilling plan and partner approval, the A07Z well is tentatively planned as the third drilling location in Cirrus' 2010 offshore drilling programme. The A07Z well would be drilled from the L11b-A production platform and is likely to utilize the upper section of the original L11b-A07 well, drilled and suspended in early 2010. If approved by partners, this well would be drilled in the second half of 2010 with first production expected in early 2011.

Cirrus' President, David Taylor, comments: "We are excited to recommence drilling operations with the M01-04 and M07-07 wells which we see as lower risk prospects that, if successful, have the potential to materially add to Cirrus' reserve and production base. We are also well advanced with planning for the MSG-03 exploration well which would be drilled from an onshore location hopefully in the third quarter of 2010. This multi-well programme is also likely to be extended subject to finalising design work and partner approval of the new L11b-A07Z well on the L08-D field.

Cirrus is fully funded for the envisaged drilling programme which combines exploration drilling with field appraisal. It is also worth noting that two of these wells (M07-07 and L11b-A07Z) would be drilled from production platforms and hence can be quickly and inexpensively completed for production."

Cirrus Energy Corporation is an international oil and gas company headquartered in Calgary and has approximately 93.3 million fully diluted common shares outstanding. Additional information about Cirrus and its business activities is available at www.cirrusenergy.ca and www.sedar.com.

Forward-Looking Statements

This press release may include forward-looking statements including opinions, assumptions, estimates and expectations of future production, cash flow and earnings. When used in this document, the words "anticipate", "believe", "estimate", "expect", "intent", "may", "project", "plan", "should" and similar expressions are intended to be among the statements that identify forward-looking statements. Forward-looking statements are subject to a wide range of risks and uncertainties, and although the Company believes that the expectations represented by such forward-looking statements are reasonable there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to, the volatility of oil and gas prices, the ability to implement corporate strategies, the state of domestic capital markets, the ability to obtain financing, changes in oil and gas acquisition and drilling programs, operating risks, production rates, reserve estimates, changes in general economic conditions and other factors more fully described from time to time in the reports and filings made by Cirrus with securities regulatory authorities.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

%SEDAR: 00021839E

SOURCE CIRRUS ENERGY CORPORATION

For further information: For further information: David Taylor, President and Chief Executive Officer, Glenn Gradeen, Executive Vice President and Chief Operating Officer, Cirrus Energy Corporation, Suite 208, 5 Richard Way, S.W., Calgary, Alberta, T3E 7M8, Canada, Website: www.cirrusenergy.ca, Telephone: (403) 216-5030, Facsimile: (403) 265-9530

Organization Profile

CIRRUS ENERGY CORPORATION

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890