Griffiths Energy Provides Development and Exploration Update

/NOT FOR DISSEMINATION IN THE UNITED STATES/

CALGARY, March 25, 2013 /CNW/ - Griffiths Energy International Inc. ("Griffiths" or the "Company") is pleased to announce an operational update summarizing its current development and exploration activities in the Republic of Chad ("Chad").

Highlights

  • The Badila-2 development well that was completed in January 2013 achieved 3,300 bopd in a maximum restricted natural flow rate test. Griffiths expects that it will produce at an initial rate of 7,500 bopd.

  • The Badila-3 development well spudded in January 2013 has been drilled to a total depth of 2,150 meters and cased as a future production well.

  • The Mangara-4 development well spudded on 13 March 2013 and drilling is scheduled to be completed by the end of April.

  • The 320 km2 3D seismic survey covering the Badila field and the adjoining Bitanda Ridge exploration prospect is on schedule to be completed during May, before the rainy season begins.

  • Griffiths estimates that the combined initial production capacity from the Badila-1 and Badila-2 oil wells will load the facilities at 14,000 bopd (gross) and continues to target the second quarter of 2013 for initial production.

Badila Development

Badila-1 and Badila-2

The Badila-2 maximum restricted natural flow rate test of 3,300 bopd compares with a previously disclosed maximum of 4,025 bopd at Badila-1. As Badila-1 has already demonstrated the high productivity and reserves potential of the Cretaceous C sands, the focus of testing at Badila-2 was the Cretaceous D. A total of 94.5 meters of net pay was opened across eight Cretaceous D sands (D1,2,3,5,6,8,9,and 10) and the Cretaceous E1 sand.

At Badila-2 the total test period was 115 hours. The maximum restricted rate of 3,300 bopd was achieved over six hours. During this six-hour period the gas-oil ratio was 105 scf/stb, API gravity was 28° to 30°, wellhead flowing pressure was 253 psi and the water-cut was 5%.

After production logging identified 98.5% water originating primarily from the Lower D8-D9-D10 sands, a temporary plug was run in the well so that the well can be initially produced water-free. Testing shows the well has a high productivity index of 17.7 bopd/psi compared with 15 bopd/psi at Badila-1.

As previously disclosed, extensive coring and wireline logging suggest 195 meters of net oil pay at Badila-2. The net oil pay includes 101 meters in the Lower Cretaceous C zone across 5 sands, 92 meters in the Lower Cretaceous D zone across 8 sands and 2.5 meters in the Lower Cretaceous E sands.

Badila-1 has 123 meters of net oil pay in the Lower Cretaceous C and D sands. Only 23.5 meters in the C sands was perforated for the test due to mechanical conditions of the well.

Griffiths estimates an initial production capability of 15,000 bopd to 17,500 bopd (gross) for both wells combined, based on a range of 7,500 bopd to 10,000 bopd at Badila-1 and a rate of 7,500 bopd for Badila-2. Therefore, the production facilities, which are limited to handle 14,000 bopd in the initial development phase, will be fully loaded by the production capability of Badila 1, 2 and 3 until the facilities can be expanded.

To achieve this combined production rate, each well will have assistance from a variable speed electric submersible pump ("ESP"). The Badila-2 ESP installation has been completed and the Badila-1 ESP installation is currently underway.

Badila-3

The Badila-3 well was drilled to appraise the reservoir structure of the north west flank of the Badila field. The well was cored at several intervals, and petrophysical analysis suggest the well has up to 71.3 meters of net oil pay.

The net oil pay includes up to 27.1 meters in the Lower Cretaceous C zone across 4 sands, and up to 44.2 meters in the Lower Cretaceous D zone across 9 sands. The well will be completed in the coming weeks to test the oil pay indicated from the petrophysical analysis and confirm productivity of the well.

Badila Exploration

The Company has commenced a 3D seismic program covering more than 320 km2 for the Badila field, as well as the adjoining Bitanda ridge, where multiple exploration prospects have been identified on 2D seismic. Seventy percent of the seismic lines have been cleared and seismic acquisition is underway. The acquisition program is scheduled for completion in May 2013, and processing will begin in June 2013.

Mangara Development and Exploration

Mangara-4

The Mangara-4 well spudded on 13 March 2013 and is expected to be completed by the end of April. The well has been targeted as a combined development well for the Cretaceous C & D sands, and as an exploration test of the Cretaceous E. Production casing will be set at 2,235 meters for the Cretaceous C and D intervals, and the well then deepened to test the exploration potential of the Lower Cretaceous E sands to a total depth of 3,300 meters.

Three wells were drilled by prior operators at Mangara between 1978 and 2007, with each encountering oil in multiple stacked reservoirs. The wells were flow tested at rates between 300 bbl/d and 1,875 bbl/d. Griffiths re-entered one of these wells in March 2012 and achieved a natural flow rate of approximately 800 bbl/d from the C reservoirs and confirmed the suspected formation damage from the original drilling.

The previous operators drilled three penetrations (of varying depths) of the Cretaceous E sands. The E Sands had good hydrocarbon shows across a gross interval of 750 meters with a potential gross section of 900+ meters based on seismic estimates. In addition, a drillstem test across a 9 meter interval at the top of the E sands showed moveable hydrocarbons with an undamaged calculated flow capacity of 220 bopd, and API gravity of 38.9°.

Civil work continues to progress to prepare for additional development drilling wells at the Mangara field, which is approximately 100 km from Badila.

Connection to the COTCO/TOTCO Export Pipeline

As previously disclosed, the connection between the Company's Badila field and the COTCO/TOTCO Export pipeline is expected to be fully completed in Q2 2013. The Modification Agreement to allow a Mangara-Badila blend was signed by all parties during March 2013.

Griffiths is also progressing with the pipeline connecting the Mangara field to the export terminal and this project  remains on schedule to be completed and commissioned in Q3 2013.

Production Facilities and Blending and Export Terminal

Griffiths Energy expects the Badila early production facility ("EPF") to be commissioned in April 2013 and ready for oil in May 2013. The EPF will initially include the pipeline tie-in of the Badila-1, Badila-2 wells, with Badila-3 tie-in planned once additional handling capacity is available.

Over the past quarter, Griffiths has progressed projects for all pipeline and facility construction, including construction and start-up of two living accommodation camps, civil work and all required foundation work. The transfer metering station is also onsite and being prepared for full production.

The Company continues to focus on supply chain management and has procured all major blending equipment, storage tanks and shipping pumps for the production processing, blending and export terminal facilities.  Over 9,000 tons of equipment has already been delivered to various project construction sites.  Delivery of all remaining equipment is on schedule.

Construction of both the Mangara production facility and the blending and export terminal is scheduled to begin during Q2 2013 and be commissioned by late Q3 2013. To prepare for the major facility construction, civil, concrete and foundation work is ongoing at multiple sites.

Gary Guidry, Chief Executive Officer of Griffith Energy, said:

"In 2013 we have successfully drilled two development wells in the Badila field and spudded a development well in the Mangara field. We have also commenced the largest 3D seismic survey ever to have been undertaken by an independent E&P company in Chad. 

"We continue to target the second quarter of 2013 for initial production and now know that production capacity from our first two Badila wells should deliver at a combined 14,000 bopd to keep our phase-1 production facilities loaded. We expect Badila-3 and the Mangara field to add further production by the end of the year."

About Griffiths Energy International Inc.

Based in Canada, Griffiths Energy is an international exploration and development company focused on oil and gas exploration, development and production activities in the Republic of Chad, Africa.  In 2011, the Company acquired their production sharing contracts ("PSCs") from the government of the Republic of Chad.  These PSCs provide exclusive rights to explore and develop reserves and resources over a combined area of 26,103 km2 in southern Chad.  The PSCs cover two world-class oil basins with development opportunity, oil discoveries, and numerous exploration prospects.

Forward-Looking Statements and General Advisory

Certain information in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may," "should," "anticipate," "expects," "seeks" and similar expressions. Specific forward-looking statements included in this press release include comments related to the expected timing of pipeline completion and facilities advancement; potential production rates; expected completion of well servicing operations; development of the Mangara and Badila field; expected completion of the 3D seismic shoot; and other matters.

SOURCE: Griffiths Energy International Inc.

For further information:

Griffiths Energy
Gary Guidry, President and Chief Executive Officer
Trevor Peters, Chief Financial Officer
403-724-7200

Longview Communications - Canadian Media Enquiries
Alan Bayless
604-694-6035

FTI Consulting - UK Media Enquiries
Ben Brewerton / Ed Westropp
+ 44 (0) 207 8313 3113
griffithsenergy.sc@fticonsulting.com

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Griffiths Energy International Inc.

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