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Connacher Great Divide wells reach 650-metre depths
2007-02-02 18:04 ET - News Release
Mr. Richard Gusella reports
February 12,2007 CLOSE CLL-TSX $3.60
CONNACHER OPERATING TEN RIGS; CONTINUED SIGNIFICANT PROGRESS AND FAVORABLE RESULTS AT ITS GREAT DIVIDE OIL SANDS PROJECT; FINAL CONSIDERATION BEING GIVEN TO SUBMISSION OF APPLICATION TO DEVELOP SECOND POD AT GREAT DIVIDE
Connacher Oil and Gas Ltd. is presently in the midst of the most active drilling program in the history of the company.
The company recently had 10 rigs working on its properties, including five core hole rigs and one surface hole rig on its exploration and delineation core hole drilling program at the company's Great Divide project. Additionally, one drilling rig is now drilling the fifth horizontal production well of the company's initial five SAGD well pairs from pad 102 at the Great Divide Pod One project. Also, three drilling rigs are being used to drill conventional natural gas prospects at Marten Creek and Simonette, Alberta. A second drilling rig, which will be used on pad 101 at the Great Divide Pod One project, is scheduled to arrive shortly and together with the Tri City No. 36 rig presently on location, will be used to drill the next 10 additional production and steam-injection SAGD horizontal well pairs. This will bring to 15 the total number of well pairs that will be available for steam injection and subsequently bitumen production targeted to reach 10,000 barrels per day, once the plant presently under construction is commissioned, start-up occurs in the summer of 2007 and bitumen begins to flow from the horizontal wells.
To date, the drilling of the horizontal production wells has proceeded extremely favourably, with no drilling complications. Connacher has been able to drill horizontal production wells to a measured length approaching 650 metres, approximately 150 metres longer than the original prognosis. This was done because the wells continued to penetrate consistently excellent bitumen-saturated reservoir, and accordingly, by extending the reach of the wellbore, more reservoir will be opened up for prospective production and recoveries once production is initiated. The company has also been successful in positioning the horizontal production wellbores in close proximity to the Paleozoic basement, thus minimizing the standoff from basement. This accordingly increases the amount of the reservoir above the production wells which can yield producible bitumen and should therefore increase recoverable reserves. Connacher also anticipates extending the horizontal length of the steam-injection horizontal wells as a consequence of the continuous high-quality reservoir encountered to date in the drilling of the horizontal production wells.
Significant progress is also being made in the construction of the plant and facilities at Great Divide Pod One. Readers are referred to the company's website; click on operations/great divide/photo gallery for up-to-date pictures of the advances being made in the construction program. Connacher has scheduled a field trip for invited analysts, institutional and other large shareholders, its bankers and various lenders who provided funds pursuant to the company's $195-million (U.S.) term loan B project financing in October, 2006. These funds, including a $15-million (U.S.) working capital facility for the company's Montana refining operation, are being used in the construction of the Pod One facility.
Elsewhere at Great Divide, the company is progressing very favourably with its core hole drilling program, which is focused on an extension to the east of Pod One and on Pod Two, Pod Four and Pod Five, as well as various other exploratory areas within Connacher's main lease block surrounding Pod One. Prior to year-end 2006, a total of six new core holes were completed; results of these wells will be incorporated into the company's year-end reserve determination for Great Divide. This information will be included in Connacher's report of year-end 2006 financial and operating results, scheduled for release on March 23, 2007.
During 2007, a total of 28 additional core holes have now been drilled with positive and in some cases very encouraging results. Several core holes have penetrated reservoir thicknesses up to 30 metres, which is thicker than that encountered at Pod One. In the opinion of Connacher's management, reservoir quality is considered encouraging and similar to that generally encountered in the region. All the cores and logs from the current program will be analyzed in detail and the results will be forwarded to the company's independent engineer for their assessment and usage in the preparation of a midyear 2007 update of its estimate of bitumen reserves and resources. Seventy core holes have been planned for this year's program, leaving 36 to be drilled prior to breakup.
Connacher's extensive 68-square-kilometre 3-D program over the balance of its main lease block is also under way. The results of this program are expected to further assist the company in designing its 2008 core hole program, which will likely include approximately the same number of new core holes as are contemplated in this year's program.
Connacher also wishes to advise that it is in the final stages of concluding a decision to apply for commercial development of Pod Two at Great Divide. This determination is expected to occur shortly, following additional and continuous consultation with relevant regulatory agencies and authorities and final review and appraisal of available technical data. An application would also entail extensive consultation with all relevant stakeholders at the appropriate time. A near-term application and subsequent timely approval would enable Connacher to minimize the period between completion of current drilling and of the Pod One plant, and subsequent commencement of the development at Pod Two. This would be consistent with the company's strategy of repeatability and sustainability in the growth of its production base in the oil sands. Sequential planning and development are anticipated to assist in continuing cost control and compression of the time taken from pod discovery to production start-up.
Since the commencement of the winter drilling season in 2007, Connacher has also drilled 13 conventional wells at Simonette and at Marten Creek in Northern Alberta. Of the total wells drilled, six are indicated natural gas wells and two are suspended awaiting further evaluation, one is drilling and four were plugged and abandoned. A further five wells are anticipated in these areas before breakup and subject to weather conditions, the company will be conducting testing, completion and tie-in activity to enhance daily production and its conventional reserve base. As these areas are winter-only access regions, efforts must be focused on a quick turnaround from drilling to the production stage or otherwise these developments must await the next drilling season in December, 2007, or January, 2008.
Connacher is extremely pleased with developments at Great Divide and is satisfied with the results to date of its conventional exploratory drilling program. The progress at the Pod One plant is on schedule and the company is benefiting from its modular approach, which is helping to keep plant costs within budgetary limits and construction on schedule. Drilling results from the horizontal SAGD production wells are most encouraging and reinforce earlier interpretations from analysis of cores and logs. New core hole results are also positive and are serving to reinforce Connacher's continued enthusiasm for the long-term potential for production expansion from its landholdings in the area. Specific results at Pod Two would seem to support a near-term application for development, subject to final deliberations. New oil sands opportunities are also emerging, which if captured, would enable Connacher to capitalize on its experience and performance to date as it focuses on future growth and development.
CLL - CONNACHER OIL & GAS LTD. - Company Website https://www.connacheroil.com