Bellamont Exploration completes second well at MonBellamont Exploration completes second well at Montney
Bellamont Exploration Ltd (C:BMX)
Shares Issued 44,714,115
Last CloseBMX.A 8/13/2009 $0.435
Thursday August 13 2009 - News Release
Mr. Steve Moran reports
BELLAMONT EXPLORATION LTD. ANNOUNCES SUCCESSFUL EXTENSION OF ITS GRIMSHAWMONTNEY OIL DISCOVERY, STRATEGIC PEACE RIVER ARCH FARMIN AND ADDITION OF MR.GREG BAY TO ITS BOARD OF DIRECTORS
Bellamont Exploration Ltd. has released the following summary.
Successful extension of Grimshaw oil pool discovery
A second well into its Montney oil discovery in Grimshaw, located at4-29-83-23W5M, has been successfully drilled horizontally and completed via 10stage hydraulic fracture stimulations. Bellamont owns 100% working interest inthe 4-29 before payout and 70% after payout. The 4-29 production tested at 400bbl/d of 30 degree API oil over the last 24 hours of a 56 hour continuous swabtest. The Corporation expects to place the well on production in fourth quarterat an initial rate of 150 bbl/d.
The 4-29 was vertically drilled at a surface location at 14-29-83-23W5M to adepth of 905, metres, logged, then plugged back and drilled out 928 metreshorizontally. Open hole logs from the vertical portion of the well encountered14 metres of gross pay in the Montney, which is virtually identical toBellamont's discovery well located approximately one mile away at 7-30-83-23W5M.The horizontal leg of the well encountered the Montney sand throughout theentire 928 metre length. These results have further reinforced Bellamont'sinterpretation of an oil pool covering multiple sections of lands, all of whichare owned and operated by Bellamont. Bellamont owns an average 76.0% workinginterest in 10 contiguous sections (6400 acres) of lands in the Grimshaw area.
The Grimshaw area offers Bellamont significant oil upside at excellenteconomics. Bellamont lands have the potential for drilling an additional 20gross (15.2 net) horizontal wells, based on 4 wells per section. Bellamontexpects the cost to drill, complete and equip horizontal multi staged fraceddevelopment wells will average approximately $1.800 million, which will resultin finding and development costs below $10.00/boe, on stream costs of $12,000boe/d and a recycle ratio in excess of 3 times. These metrics will be furtherenhanced by taking into account the drilling royalty credit announced by theAlberta Government, which provides for a corporate royalty credit equivalent to$200/metre drilled, for all wells drilled before April 1, 2011. Such wells willalso qualify for the Alberta Governments royalty reduction program, whichprovides for a 5.0% maximum royalty for the first 12 months of production, or 50thousand barrels of oil production, whichever is reached first. In the future,Bellamont should be able to realize capital efficiencies by utilizingcentralized drilling pads and facilities, further enhancing the economics of theplay.
Valhalla Area farm-in
The Valhalla area is a new core area that Bellamont began assembling a landposition in late 2008. The Corporation's primary focus has been natural gas inthe Falher formation, which is a medium depth (~ 1500 metres) Cretaceous sand,though the area offers potential in numerous other horizons, including theTriassic. From an original acquisition of 50 boe/d from a single zone well inlate 2008, the Corporation has grown production in Valhalla to 215 boed (100%natural gas) from two wells and four producing intervals. In addition, Bellamonthas production tested 1.00 mmcf/d from a third well, which it expects to tie-induring the fourth quarter and produce at a stabilized rate of approximately 70boe/d. All of the incremental volumes were obtained via re-entries of existingcased well bores and as such, have resulted in excellent on stream costs ofapproximately $8,500 boe/d.
Currently, the Corporation has an average working interest of 97% in 13 grosssections (12.6 net). The Corporation has mapped gas in place in the FalherFormation on the majority of its lands, all based on bypassed pay in existingwell bores. Bellamont's production is coming from two distinct sands in theFalher, one of which was a new pool discovery by the Corporation. Bellamontbelieves that up to five separate Falher sands are prospective and expects theValhalla area to yield a significant amount of low risk production and reserveadditions for the foreseeable future.
Bellamont has recently entered into multiple agreements (the "farm-inAgreements") which will provide the opportunity for the Corporation tosignificantly expand its land footprint in the Valhalla area on a cost effectivebasis. Key attributes of the farm-in Agreements are as follows:
- Access to earn up to 18 gross sections (9.2 net) of land located in closeproximity to Bellamont's existing land base;
- Commitment to re-enter and complete 3 suspended wells (1.75 net) byNovember 1, 2009;
- Earning is 100% of the Farmor's interest, subject to a non-convertibleoverriding royalty; one section per recompletion, two sections per verticaldrill and four sections per horizontal drill;
- 180 day rolling options to elect and drill wells to continue to earnfurther lands;
- Multi-zone, medium depth (1,500 m) by-passed gas play;
The wells targeted for the re-entry pursuant to the farm-in agreements, allowBellamont, at minimal cost, to significantly extend the established poolboundaries and test new Falher pools/sands. Furthermore, success will set upfuture drilling locations, timed to when the Corporation expects to be animproved price environment for natural gas. All of the wells to be re-enteredand/or drilled will qualify for the new well Alberta Government's royaltyreduction program, which provides for a 5.0% maximum royalty for the first 12months of production, or 500 million cubic feet of gas production, whichever isreached first.