Oilexco
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Address
3200 - 715 5th Avenue SW
Calgary
Alberta T2P 2X6
Tel (403) 262-5441
Fax (403) 263-3251
Web http://www.oilexco.com
Email oilexco@telusplanet.net
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Capex
For 2008, the Company's Board of Directors has approved a capital budget of $707 million. These funds will primarily be spent on drilling additional production wells in the Balmoral core area, the development of the Shelley oil accumulation, and on appraisal and predevelopment expenditures at Huntington.
Future Plans
2008 Highlights
• $707 million capital budget, for exploration, appraisal and development, and production activities, approved for 2008
• Successful completion of first stage of appraisal drilling on Huntington discovery, Block 22/14b
• Drill-stem testing of two intervals within Paleocene Forties oil pay yielded maximum flow rates of 2,100 Bbl/d and 5,208 Bbl/d
• Appraisal well targeting Jurassic Fulmar sands will commence shortly
• Appraisal of Shelley oil accumulation, Block 22/2b and 22/3a, completed and first oil on track for Q3/Q4 2008
• Currently participating in two exploration wells; Morro/Coronado in Block 23/13b, southwest of Huntingdon oil discovery and second exploration well at Mallory in Block 22/14a
• Strong reservoir performance continues at Brenda and Nicol; production currently restricted, but levels set to increase following commissioning of multiphase pump
• Closing of Balmoral acquisition on schedule to occur by end of Q4
Exploration
The Company is participating in the drilling of two exploratory wells in the Huntington area, at Morro/Coronado and Mallory. The first well at Morro/Coronado (72.7% WI), located in Block 22/13b southwest of the Huntington oil discovery, is targeting oil in the Paleocene Forties sands. Drilling operations on this well utilizing the Ocean Guardian semi-submersible drilling unit are expected to be completed by the end of December.
The second exploratory well at Mallory, located in Block 22/14a northeast of the Company's Huntington oil discovery, is targeting oil in Upper Jurassic Fulmar sands. This well is located either on an analogous structure on trend with, or an extension to, the Company's Huntington Fulmar oil discovery. Drilling operations on this non-operated well where the Company is paying 54% of the drilling costs for a 27% interest in all zones below the Lower Cretaceous Chalk, which include the Upper Jurassic Fulmar sands, are expected to be completed in the first quarter of 2008.
Appraisal and Development
At the Company's 40% owned Huntington oil find located in Block 22/14b, which was discovered in June this year, appraisal drilling of the northwestern half of the Paleocene "Forties" oil accumulation has been completed. Drill-stem testing of two intervals within 101 vertical feet of oil bearing Paleocene Forties oil pay was conducted on the eighth (8th) appraisal well bore. The first test was conducted across 20 feet of perforations from 9,982-10,002 feet measured depth close to the free water contact. Oil flowed from this first test at a maximum rate of 2,100 Bbl/d through a 44/64th inch choke at 371 psi flowing pressure. The second test was conducted through 75 feet of perforations from 9,870-9,945 feet measured depth at the top of the reservoir interval. The maximum oil flow recorded from this second test was 5,208 Bbl/d of 44 degrees API oil through a 72/64 inch choke at 380 psi flowing pressure. No water or sand was recovered in either test.
Drilling operations will commence shortly on the next phase of appraisal drilling at Huntington. This single appraisal well bore will attempt to target the oil/water contact in the Jurassic Fulmar sands on the flank of the structure well below the elevation tested by the discovery well drilled in the second quarter. This well is expected to be completed in the first quarter of 2008.
Appraisal of the Company's 100% owned Shelley oil accumulation located in Block 22/2b and 22/3a has been completed. The last phase of the appraisal program consisted of the drilling of 14 appraisal well bores to define the limits of the Paleocene Forties sand oil accumulation and to collect additional reservoir data. These operations were also successful in extending the known oil column and confirming the location of the oil accumulation's free water contact. This was achieved through coring of the reservoir and by perforating a 14 foot interval at and immediately above the free water contact in the last well-bore of the appraisal program. A drill-stem test preformed over the interval to evaluate the nature of the fluid and the production behavior at and above the free water contact was successful; flowing 1,930 Bbl/d of oil, oil emulsion and water through a 44/64 inch choke at 298 psi flowing pressure. The Company's current plans are to initially develop the oil accumulation with up to three horizontal production wells tied into the Sevan Voyageur FPSO. First oil is currently estimated to occur late in the third quarter to early in the fourth quarter of next year.
Production
In the Balmoral core area, which includes the Balmoral FPV and the Brenda/Nicol oil accumulations, activity has been centered on closing the acquisition of additional interests in the Balmoral FPV and the Balmoral, Glamis, and Sterling oil fields, as well as completing topsides work on the Balmoral FPV to allow the commissioning of the Company's subsea multiphase pump at it's Brenda manifold. Closing of the Balmoral acquisition is on schedule to occur by the end of the fourth quarter, which will be followed by the orderly transfer of operatorship to Oilexco of the Balmoral FPV.
Commissioning of the Company's multiphase pump at Brenda is currently underway. Commissioning of this integral component of the Company's subsea production system at Brenda has been delayed for several months due to issues at the Balmoral FPV. These issues have been resolved. Production from Brenda and Nicol has continued to be restricted to rates between 18,000 to 20,000 Bbl oil per day until the commissioning of the multiphase pump at Brenda. The Company believes that production levels at Brenda/Nicol are set to increase once this key component is in operation. Reservoir performance at Brenda and Nicol continues to meet or exceed our expectations.Production
Average daily production of oil and gas for the whole of 2007 was11,748 BOE/dayReserves
2007 Reserves
• 53% increase in 1P reserves to 40,824.6 Mboe (2006: 26,614.1 Mboe)
• 46% increase in 2P reserves to 62, 925.8 Mboe (2006: 42,994.0 Mboe)
• 61% increase in 3P reserves to 91,130.3 Mboe (2006: 56,713.0 Mboe)
Proved and Probable Reserve volumes and values increased in 2006 due to the successful development drilling program at Brenda, and the significant increase in oil prices in 2006. Proved reserves of light oil at December 31, 2006 were 26.6 MMBbls, an increase from the 24.6 MMBbls of light oil reported at December 31, 2005. Proved plus Probable reserves at December 31, 2006 increased to 42.9 MMBbls of light oil from 36.8 MMBbls of light oil reported at December 31, 2005. Proved plus Probable plus Possible light oil reserves were 56.7 MMBbls at December 31, 2006 an increase from 51.1 MMBbls reported at December 31, 2005. The Company's 2006 reserves were independently evaluated by Sproule International Limited.
Who's Who
Arthur S. Millholland, P. Geol.
President, CEO & Director
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Rod Christensen, P. Geol.
Vice President, Exploration
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David L. Marshall
General Manager, Oilexco North Sea Limited
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Brian Ward
Chief Financial Officer
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Aleksandra Owad
Chief Accounting Officer
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Adrian Jones
Drillings and Completion Manager, Oilexco North Sea Limited
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W. Fraser Grant
Director
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Kevin A. F. Burke
Director
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John F. Cowan
Director
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William Smith
Director
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Anne Marie
Non-Executive Director
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Offices
Canada
Head Office
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United Kingdom
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United Kingdom
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