ExxonMobil Touts Three Deepwater GOM Discoveries

- ExxonMobil Touts Three Deepwater GOM Discoveries

Wednesday, June 08, 2011
ExxonMobil Corp.

ExxonMobil announced two major oil discoveries and a gas discovery in the deepwater Gulf of Mexico after drilling the company's first post-moratorium deepwater exploration well.

The KC919-3 wildcat well confirmed the presence of a second oil accumulation in Keathley Canyon block 919. The well encountered more than 475 feet of net oil pay and a minor amount of gas in predominantly Pliocene high-quality sandstone reservoirs. The well, which is continuing to drill deeper, is located 250 miles southwest of New Orleans in approximately 7,000 feet of water.

Drilling in early 2010 encountered oil and natural gas at Hadrian North in KC919 and extending into KC918, with over 550 feet of net oil pay and a minor amount of gas in high-quality Pliocene and Upper Miocene sandstone reservoirs.

ExxonMobil encountered 200 feet of natural gas pay in Pliocene sandstone reservoirs at its Hadrian South prospect in Keathley Canyon block 964 during drilling in 2009.

"We estimate a recoverable resource of more than 700 million barrels of oil equivalent combined in our Keathley Canyon blocks," said Steve Greenlee, president of ExxonMobil Exploration Company. "This is one of the largest discoveries in the Gulf of Mexico in the last decade. More than 85 percent of the resource is oil with additional upside potential."

"We plan to work with our joint venture partners and other lessees in the area to determine the best way to safely develop these resources as rapidly as possible," Greenlee said.

ExxonMobil is the operator of KC918, KC919, KC963 and KC964 with 50 percent working interest. Eni Petroleum US LLC and Petrobras America Inc. each hold a 25 percent working interest in KC919, KC963 and KC964. Petrobras America Inc. holds a 50 percent working interest in KC918.

Over the past decade, ExxonMobil has drilled 36 deepwater wells in the Gulf of Mexico in water ranging from 4,000 feet to 8,700 feet.

"As one of the largest lease holders in the Gulf of Mexico with interests in over 370 leases, we are committed to the continued safe exploration and development of this important national resource," Greenlee said.

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Chesapeake Resumes Work Three Weeks after Accident

- Chesapeake Resumes Work Three Weeks after Accident

Monday, May 16, 2011
Pittsburgh Post-Gazette
by Laura Olson

Three weeks after the gas-well blowout at one of its Bradford County sites, Chesapeake Energy announced it will resume well-completion operations in Pennsylvania.

The company had voluntarily halted hydraulic fracturing and other procedures to prepare a well for production following an April 19 accident. As workers attempted to seal that well, briny wastewater spilled for several hours into a nearby creek tributary.

Chesapeake's well-completion work resumed in late April at its West Virginia and Ohio sites, but sites here remained idle as state Department of Environmental Protection officials sorted through company paperwork detailing what happened.

DEP spokeswoman Katy Gresh said the agency also was waiting on "assurances" from Chesapeake that they would use local well-control specialists if the company has an accident requiring such assistance. In the Bradford incident, the company called the Houston-based company Boots and Coots, who did not arrive on the scene for 12 hours.

Ms. Gresh said Chesapeake agreed to local well-control specialists in the future, which the company also noted in its statement.

The company attributed the accident's cause to a faulty connection at the wellhead, which allowed fluid to be released. They described the valve failure as "extremely rare," adding that they have since inspected their wellheads and updated how the equipment is assembled.

"We understand that operating in the Commonwealth of Pennsylvania is a privilege," said John Reinhart, Chesapeake's vice president of operations for its eastern division. "We have learned from this and have taken steps to mitigate the risk of this type of event happening in the future."

Of the wastewater that spilled off the well pad, Chesapeake officials said about 240 barrels of "a mixture of well fluid and rain water" flowed onto nearby land and into a small tributary. They estimated that figure included one barrel's worth of highly diluted chemical additives used in hydraulic fracturing.

The spill caused "minimal and localized impact" to the environment, according to the company. They said a small farm pond near the well was drained, and the water treated at a Chesapeake wastewater recycling facility. DEP officials also have reported that an unknown number of amphibians died in the pond.

State environmental officials have not yet issued any fines or violations in response to the incident. Ms. Gresh said the DEP investigation is ongoing.

Copyright (c) 2011, Pittsburgh Post-Gazette

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Kodiak Charges Ahead in Three Forks, Bakken Development

Kodiak Charges Ahead in Three Forks, Bakken Development

Tuesday, April 19, 2011
Kodiak O&G Corp.

Kodiak O&G provided an interim corporate update.

Interim Operations Update

Kodiak currently operates a two-rig-drilling program in the Williston Basin and anticipates taking delivery of a third rig within the next two weeks. The Company is currently negotiating to contract a fourth rig for delivery in the fourth quarter of 2011. Additionally, Kodiak controls a 40% to 50% working interest in wells being drilled by a non-operated drilling rig as part of its Dunn County, N.D. area of mutual interest with ExxonMobil.

Bakken/Three Forks Development: McKenzie County, N.D. (37,000 gross and 27,000 net acres) - Bakken producer records initial production (IP) rate of 3,042 BOE/d

The Koala #9-5-6-5H well [Kodiak operated – 95% working interest (WI) /78% net revenue interest (NRI)], an 8,967-foot horizontal lateral, was successfully completed in 24 stages in the middle Bakken Formation. During a 24-hour period, the well recorded production of 2,526 barrels of oil (BO) and 3.10 million cubic feet of natural gas (MMcf), or 3,042 barrels of oil equivalent (BOE). Kodiak completed the 24-hour production test utilizing an average 38/64" choke with average flowing casing pressure of 1,800 psi. Since coming online, the well had cumulative production of 7,340 BO and 7.5 MMcf, or 8,590 BOE in the first five days of production while continuing to recover frac load during well flowback.

Three Forks producer records IP rate of 2,327 BOE/d

The first well completed on the pad, the Koala #9-5-6-12H3 [Kodiak operated – 95% WI/78% NRI], a 9,171-foot horizontal lateral, was successfully completed in 22 stages in the Three Forks Formation. During a 24-hour period, the well recorded production of 1,919 BO and 2.45 MMcf, or 2,327 BOE. Kodiak completed the 24-hour production test utilizing a 36/64" choke with average flowing casing pressure of 1,400 psi. Since coming online, the well had cumulative production of 8,251 BO and 10.57 MMcf, or 10,012 BOE in the first nine days of production while recovering the frac load during well flowback. Koala #9-5-6-12H3 production was temporarily curtailed due to surface facility constraints while completion work on the second well on the pad, the Koala #9-5-6-5H, was completed.

The Three Forks well, the Koala #9-5-6-12H3, was drilled 700 feet from the Bakken well, the Koala #9-5-6-5H, in an ongoing effort to evaluate communication between the middle Bakken and the Three Forks Formation. By successfully completing the Koala #9-5-6-12H3 well, Kodiak now demonstrates the productive potential of the Three Forks Formation as an oil-prone reservoir system on this part of its McKenzie County core operating area.

The Company currently has one well, the Koala #3-2-11-14H, awaiting completion in McKenzie County as part of a two-well pad, and is drilling ahead on the Koala #3-2-11-13H well [both Kodiak operated – 50% WI/41% NRI]. These two well bores are being drilled approximately 1,300 feet apart in the middle Bakken in an effort to test well bore density within the drilling unit. These wells are projected to be completed in the second quarter 2011. Once the well is down, the rig will be moved to drill the Koala #2-25-36-15H [Kodiak operated – 66% WI/53% NRI], the first well of a two-well pad.

Bakken/Three Forks Development: Dunn County, N.D. (56,000 gross and 34,000 net acres) - Drilling and Completion Activity

Kodiak currently has two gross wells (1.0 net) which are expected to be completed in the second quarter 2011. Additionally, Kodiak has drilled and is awaiting completion of three gross wells (1.95 net wells) off of an existing four-well pad, and is currently drilling the final well from the pad, the Skunk Creek (SC) #2-24-25-16H [Kodiak operated – 97% WI/79% NRI]. Completion operations are projected to commence on this four-well pad in the third quarter 2011. Once drilling is completed on the four-well pad, the rig will move to the SC #12-10-11-9H well [Kodiak operated – 97% WI/79% NRI], the first of a two-well pad.

On its non-operated portion of lands in Dunn County, Kodiak has participated in the drilling of two gross wells (1.0 net well) that are currently waiting on completion. Two additional wells are currently being drilled from a two-well pad in which Kodiak has a 50% and 44% WI (41% and 36% NRI).

In conjunction with its first quarter 2011 operational and financial results news release expected to be issued after the close of trading on May 5, 2011, the Company intends to furnish a comprehensive operations update, including its per-well tabular data that includes working interest, net revenue interest, lateral length and 30/60/90/180 and 360-day production rates.

Dedicated Fracture Stimulation Team

The Company has formally executed a two-year agreement with its pressure-pumping service company whereby Kodiak will have a dedicated crew for 14 days per month, reconciled on a quarterly basis, commencing in the third quarter 2011.

Management Comment

Commenting on ongoing operations, Kodiak's President and CEO Lynn A. Peterson said, "Our drilling and completion operations in both McKenzie and Dunn counties continue to move forward. We are very pleased with the results from the two-well pad in McKenzie County, our first two operated wells in this area. The well results are important in that we have now demonstrated the productive potential in the Koala project area for both the middle Bakken and Three Forks Formations. Equally important is that we have drilled these high-working-interest wells in a manner that will allow us to evaluate communication between the two formations, as we obtain additional production history.

"The execution of a formal agreement with our pumping service company should provide continued improvement in the timing of our well completions. Utilization of pad drilling allows for successive completions improving our efficiencies through reduced time for equipment mobilization and demobilization between wells. We look forward to expanding this agreement to include more days as we move into the second half of the year and bring our fourth drilling rig under contract."

Borrowing Base Re-determined at $75 Million

Kodiak also announced that is has completed its semi-annual re-determination of its borrowing base under its $200 million senior secured revolving line of credit facility with Wells Fargo Bank, N.A. As a result, the Company's borrowing base has been increased to $75 million from the previously available $50 million. There are currently no borrowings under the facility and Kodiak is in compliance with the financial covenants under the credit facility.

"The increase in our borrowing base is reflective of our continued success in the Williston Basin," said James Henderson, Kodiak's Chief Financial Officer. "Our cash balances, operating cash flow and expanded revolving line of credit provide the Company with liquidity and balance sheet flexibility as we execute on growth-oriented development drilling in 2011 and into 2012."

Edge Boosts Production, Drills 3 Wells

Edge Boosts Production, Drills 3 Wells

Wednesday, March 30, 2011

Edge Resources Inc.

Edge has completed the first three wells of a multi-well drilling program. Additionally, the Company has increased production by fracturing and tying two wells into its 100% owned and operated, dedicated shallow-gas infrastructure.

The drilling rig, on contract from Ensign Energy Services, moved to the Company's location directly from northern Alberta on March 14, 2011. The rig drilled the first of at least eight licensed locations, with several others soon to be licensed and drilled. The rig was released because of "spring breakup", a period during which the winter frost comes out of the ground and the various counties restrict the movement of large equipment over the roads.

Brad Nichol, President and CEO of Edge commented, "I'm pleased with the operational team's ability to have squeezed this rig into our drilling plan prior to break-up versus waiting until break-up is over and competing with many other companies for the rigs. I am equally impressed with how quickly my team reacted to the availability of fracturing equipment.

On notice that the equipment was coming available, we immediately moved to put that equipment to work on our wells, and already have two of those wells producing into our own pipeline."

The Company commenced fracturing operations on several wells, after waiting since December 2010 for equipment to come available. The Company has successfully fractured two wells, both of which were immediately tied-into 100% owned and operated, existing shallow-gas infrastructure. Other wells will be fractured as part of this program but will not be tied-into pipeline until after spring breakup.

These two wells are flowing over 1,000 mcf/day (167 boe/day) on initial production, which adds significantly to the Company's total production mix. The Company is now generating significant revenue and positive cash flow on a monthly basis.

The Company has very low operating and F&D costs, and expects to be profitable at a natural gas price of less than $2.00/mcf.

Edge has now earned or acquired a total of 23 sections of Edmonton Sands natural gas property, each containing one drilled Edmonton Sands well. The Company has executed agreements that allow for up to another 27 sections of prospective Edmonton Sands land to be earned by drilling 1 well on each respective section.