CALGARY, Sept. 4 /CNW/ - Galleon Energy Inc. ("Galleon") is pleased to
announce the successful drilling of a significant Montney horizontal oil well
located in British Columbia and strong drilling results in the Central and
Eastern upper Montney projects.
Galleon's recently drilled horizontal well in north east BC tested in
excess of 200 Bbl/d of 42 degrees API crude oil and 1.0 Mmcf/d of natural gas
(370 BOE/d) (gross rates, Galleon's interest is 77%) over a period of 4 days.
Four multistage horizontal fractures were performed. Tie-in of this well is
expected within the next six weeks with completion of a natural gas line. The
well is expected to be produced at an initial rate of approximately 250 BOE/d.
This is the first horizontal well that has been drilled on this Montney
turbidite trend. To date, the lead vertical well on the play has produced
approximately 58,200 Bbl of crude oil and 0.42 Bcf of natural gas. This
vertical well has a net pay of 50 feet and 12% porosity. Based on current
commodity prices, royalty rates and estimated operating costs, pay out of this
horizontal well is expected to be within 1 year.
Based on 3D seismic and geological interpretation, the current pool size
is estimated to be 6 miles in length and 0.75 miles in width. Approximately
35% of the pool has been delineated to date based on well logs, completions,
tests and production. Galleon plans to further delineate this pool by drilling
up to 12 horizontal wells under current spacing restrictions over the next 18
months. With down spacing, an additional 12 horizontal wells are planned.
Galleon has access to an approximate 68% interest in over 5,000 gross
acres of land on this Montney trend within the project area.
Galleon is committed to developing its resource plays in BC in a program
designed to test at least 4 additional resource fairways. Galleon has access
to approximately 50,847 gross acres (35,120 net acres) of land in BC. Galleon
plans to target approximately 15% to 20% of the 2009 drilling capital program
CENTRAL AND EASTERN UPPER MONTNEY
Galleon's first horizontal well drilled in the Central fairway was
completed in early July 2008 in the upper Montney zone. The well (100%
interest) has been on production for over one month and has produced at a
stabilized rate of 3.4 Mmcf/d with 20 Bbls of crude oil over this period.
One Montney vertical well (100% interest) in the Central fairway was
completed in July. The well has been on production for two weeks and is
producing from two separate Mid Montney zones. The first zone is producing
1 Mmcf/d and 18 Bbl/d of liquids. The second zone is producing 1.0 Mmcf/d and
8 Bbl/d of liquids. Follow up horizontal drilling is planned in 2009.
In the Eastern Montney fairway, 8 Montney horizontal wells (100%
interest) have been drilled in 2008. Four wells are currently producing, in
aggregate, over 1,000 BOE/d. Two wells are awaiting tie-in with production
capacity of approximately 400 BOE/d. Two wells are awaiting recompletion.
At least two more Montney horizontal wells are planned in the Central
fairway and at least 16 Montney horizontal wells are planned in the Eastern
fairway over the remainder of 2008.
Galleon has access to approximately 506,000 gross acres of prospective
Montney lands in the Central and Eastern areas.
Galleon has approximately 72.9 million Class A shares and 922,500 Class B
shares issued and outstanding which trade on the TSX under the symbols "GO.A"
ADVISORY: Certain information regarding Galleon in this news release
including management's assessment of future plans and operations, number, type
and timing of wells to be drilled, completed and tied-in, the plan and
development of certain prospects, production estimates, allocation of capital
to certain projects, and the timing of payout of the horizontal wells, may
constitute forward-looking statements under applicable securities laws and
necessarily involve risks including, without limitation, risks associated with
oil and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, capital expenditure costs, including drilling, completion and
facilities costs, unexpected decline rates in wells, wells not performing as
expected, delays resulting from or inability to obtain required regulatory
approvals and ability to access sufficient capital from internal and external
sources. As a consequence, actual results may differ materially from those
anticipated in the forward-looking statements.
Forward-looking statements or information are based on a number of
factors and assumptions which have been used to develop such statements and
information but which may prove to be incorrect. Although the Galleon believes
that the expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements because the Galleon can give no assurance that such
expectations will prove to be correct. In addition to other factors and
assumptions which may be identified in this document, assumptions have been
made regarding, among other things: the impact of increasing competition; the
general stability of the economic and political environment in which the
Galleon operates; the timely receipt of any required regulatory approvals; the
ability of the Galleon to obtain qualified staff, equipment and services in a
timely and cost efficient manner; drilling results; the ability of the
operator of the projects which the Galleon has an interest in to operate the
field in a safe, efficient and effective manner; the ability of the Galleon to
obtain financing on acceptable terms; field production rates and decline
rates; the ability to replace and expand oil and natural gas reserves through
acquisition, development of exploration; the timing and costs of pipeline,
storage and facility construction and expansion and the ability of the Galleon
to secure adequate product transportation; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters in the jurisdictions in which the
Galleon operates; and the ability of the Galleon to successfully market its
oil and natural gas products.
Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that could
effect Galleon's operations and financial results are included in reports on
file with Canadian securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com), at Galleon's website
(www.galleonenergy.com). Furthermore, the forward-looking statements contained
in this news release are made as at the date of this news release and Galleon
does not undertake any obligation to update publicly or to revise any of the
included forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable securities
Disclosure provided herein in respect of barrels of oil equivalent (boe)
may be misleading, particularly if used in isolation. A boe conversion ratio
of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
For further information:
For further information: see www.galleonenergy.com or contact: Steve
Sugianto, President and Chief Executive Officer, (403) 261-9287,
firstname.lastname@example.org; Glenn R. Carley, Executive Chairman, (403) 261-9277,
email@example.com; Shivon Crabtree, Vice President and Chief Financial
Officer, (403) 261-9276