CALGARY, Oct. 14 /CNW/ - Richards Oil & Gas Limited (the "Company") (TSX Venture: RIX) is pleased to provide an operational update on activities in the third quarter of 2008 and for the balance of the year. Highlights - Production from the Company's properties has been steady for the month of September and into early October with current volumes estimated at 200 boe per day. - All of the requisite licensing, permitting and land acquisitions have been completed on the Company's Thorsby gas processing facility with construction of the compressor station and the gas gathering system now underway. - The Company anticipates exiting 2008 with production between 360 to 420 boe per day based on the completion of the gas processing facility at Thorsby combined with increased production from the Company's Morningside/Lacombe area. Management is encouraged with the recent drilling success in the area. Drilling and Completion Activities and Current Operations In the third quarter of 2008, the Company successfully drilled five wells (4.4 net) targeting the Horseshoe Canyon coals and the intermingled sands, with four (4.0 net) of these wells drilled on the Company's Thorsby farm-in lands. In August, the Company re-completed one Morningside/Lacombe Coalbed Methane ("CBM") well (0.6 net) in the intermingled sands, adding over 400 mcf per day of net gas production capacity from this well. The Company is currently working with the owner of the sales line to increase overall production capacity from this area so that this well can be produced at its full capacity. In addition to these drilling and completion operations, the Company also carried out regulatory pressure control work in the Morningside/Lacombe area. This work, combined with some compressor optimization efforts, reduced total Company production volumes to approximately 180 boe per day for the months of July and August. Thorsby Gas Processing Facility Construction of the Company's Thorsby gas processing facility began today. The Thorsby gas processing facility will be a central compression facility with a large diameter trunk line that will be 75% owned and operated by the Company. The facility has been designed to achieve a low inlet pressure to maximize CBM production, minimize operating costs, and will provide for low cost tie in of future development wells. Facility completion and commissioning is anticipated for the end of November 2008 when nine standing wells (6.9 net) will be tied in. Production Growth to Year End The Company is working through the regulatory process at Thorsby to allow for co-mingled production from CBM and sands. This production, without co-mingling, is estimated to add 145 to 205 boe per day of net production. An additional 90 mcf per day or 15 boe per day is expected from the additional well at the Company's Morningside/Lacombe area once the recently completed well can be produced at its full capacity. These production increases, without co-mingling approval, will result in a 2008 exit rate for the Company between 360 to 420 boe per day. Once co-mingled production is approved at Thorsby an additional 80 to 100 boe per day of net production is expected to accrue to the Company from the wells tied in November 2008. Crossfield Area Update The Company has two standing wells in the Crossfield area that have each been flow tested at over 120 mcf per day from the CBM and sand zones. The Company is evaluating alternatives to get this gas to market along with additional land opportunities in the area. In addition, a recent evaluation of Company owned 3D seismic indicates there is deeper Elkton gas and Viking oil potential at Crossfield. The Company is presently seeking joint venture partners to participate in these conventional opportunities. Summary The Company is very proud of the progress it has made in furthering the development of its Thorsby property. Just over one year ago the Company had no production from the area and held only 7 sections of land (2.1 net). Since the third quarter of 2007 the Company has; demonstrated successful Horseshoe Canyon CBM production from two wells, earned and acquired an additional 11 net sections of land, drilled 17 (14.3 net) wells and initiated construction of a scalable gas processing facility that will allow the Company to economically develop the resources in the Thorsby area. Through its drilling and completion efforts over the past year the Company has been able to substantiate its expectations that the Horseshoe Canyon coal package is well developed in the Thorsby area and the initial flow rates from the various Edmonton sand zones in many well bores has been greater than expected. This conventional gas production, in addition to the CBM, will result in increased production, reserves and project economics. The additional production will provide the Company with a significant increase in cash flow into 2009 that will be used to tie in the five 2008 standing wells (5.0 net) at Thorsby and drill additional wells. The magnitude of capital expenditures for 2009 will be determined by the amount of available cash flow which is affected by natural gas pricing, operating cost performance and market conditions. About Richards Oil & Gas Limited Richards Oil & Gas Limited is a Calgary-based exploration company, involved in the development of crude oil and natural gas, with an emphasis on the exploitation of shallow natural gas resources including coal bed methane (CBM). With a significant land base and industry-leading experience in the development of CBM and conventional natural gas projects, the Company is able to capitalize on opportunities that create both short-term cash flow and long-term value for its shareholders. Coalbed Methane ("CBM") or Natural Gas from Coal ("NGC") is technically defined as gas produced naturally by coalification, and found within coal natural gas reservoirs consisting predominately of methane, with smaller amounts of higher hydrocarbons, water vapor, nitrogen, carbon dioxide, or other non-hydrocarbons. The majority of gas is usually physically sorbed within the microporosity and mesoporosity within the organic matrix. The Company's management has experience in the development of CBM and conventional gas projects, which it is using to exploit the Company's land base and to add and sustain significant value for its shareholders. ADVISORIES BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Statements in this news release contain forward-looking information including expectations of future production, estimates of proven and probable reserves, procurement of drilling permits, plans for and results of exploration and development activities and other operational developments. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices, and exchange rate changes. Industry related risks include, but are not limited to; operational risks in exploration, development and production, availability of skilled personnel and services, failure to obtain industry partner, regulatory and other third party consents and approvals, delays or changes in plans, risks associated with the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of reserves, production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information. The forward-looking statements contained herein are subject to change. Except as required by applicable securities laws, the Company assumes no obligation to update or revise any forward-looking statements should circumstances or management's opinions or estimates change. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release. %SEDAR: 00021365E
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For further information: go to our website at www.richardsoilandgas.com or please contact: Brad Turner, President & CEO, Richards Oil & Gas Limited, Tel: (403) 265-8444, E-Mail: bturner@richardsoilandgas.com; Lonn Bate, CFO, Richards Oil & Gas Limited, Tel: (403) 265-8444, E-Mail: lbate@richardsoilandgas.com
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