In 2013, Strategic drilled 3 step out vertical wells at Steen River. Two of the three vertical wells were targeting new pools with the third well extending an existing keg river pool. All three wells have been cased with promising shows while drilling and on logs. The three wells are currently being flow tested to a temporary battery and are expected to be tied in during March.
Strategic completed its first multistage frac well 03/12-18 into the muskeg formation in the fourth quarter of 2012. Due to limited fluid handling capability at the West Marlowe field, the horizontal well has been flowing into a pipeline against a back pressure of 4000-5000 kpa, which limits the drawdown on the well. The well is currently producing 180 Boed (45% light oil) with limited drawdown. Strategic is planning to tie the well into the newly acquired facility and optimize the drawdown in March 2013.
In 2013 Strategic drilled a muskeg stack horizontal well 14-18, following up on the success of the horizontal well 03/12-18. A second muskeg horizontal well is currently underway from the same pad and completion operations will commence on both wells once the second drilling operation is completed.
In order to prove up the muskeg stack fairway, Strategic completed a vertical well 07-28 in the muskeg stack. This well is located approximately 15 km east of the first muskeg stack horizontal well. This well is currently producing at 75 Boe/d. A third muskeg stack horizontal well has been spudded at 13-28, keying off of a successful vertical test of the Muskeg Stack in that region of the field. Strategic will be tying in the three new muskeg stack horizontal wells in March 2012.
In addition, Strategic has undertaken four recompletions in existing wellbores to confirm the resource potential of several zones as well as testing completion techniques to improve the initial production potential of the wells. The results have been very encouraging and these wells are being placed on production to ascertain the longer term performance of these wells.
Strategic's current corporate production is 3,100 Boe/d (91% oil). The current production does not include any new production from the wells drilled to date in 2013. The new wells will be tied into Strategic's facility at Steen River starting in March 2013. Approximately 50% of Strategic's current light oil production is transported by rail. The rail option gives Strategic exposure to Brent and WTI pricing for its crude. The Company reaffirms its earlier production guidance of an average of 4,000 Boe/d for 2013.
Strategic is a well-capitalized junior oil and gas company committed to growth by exploiting its light oil assets in Canada. Strategic is primarily focused on implementing development plans for its light oil properties, while continuing to review other high impact light oil resource plays. Strategic's common shares trade on the TSX Venture Exchange under the symbol SOG.
Additional information is also available at www.sogoil.com and at www.sedar.com.
Unaudited Financial Information
Certain financial and operating information included in this press release for the year ended December 31, 2012, such as capital expenditures, production, F&D costs and FD&A costs are based on unaudited financial results, and are subject to the same limitations as discussed under "Forward-Looking Information". These estimated amounts may change upon the completion of audited financial statements for the year-ended December 31, 2012 and changes could be material.
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