RE: RE: News...2650 Barrels/day in two wells!These production results from two recently completed light oil horizontal wells are very positive and should boost exit production in 2011 to the high end of the 1900-2100 barrels per day.
TriOil continues to successfully apply horizontal drilling andmulti-stage fracturing technologies to evaluate and exploit new light oilopportunities.
An outstanding example of this is its first horizontalwell in a new light oil reservoir and project area for the Company in western Alberta with very encouraging initial results.
The well was completed with an 18stage, water-based foam fluid system and flowed hydrocarbons over a 68 hourperiod at an average rate of 1,630 barrels per day of oil and 1.4 mmcf ofnatural gas per day, for a total of 1,870 barrels of oil equivalent per day,with a water cut of 1% and a final flowing wellhead tubing pressure of 2,000kPa. TriOil owns a 30 percent working interest in this well and 3 potential development locations on the section.
Even better, TriOil currently owns, and has the right to earn, interests ranging from 30 to 100 percent in seven prospective sections of land in close proximity to this first successful well in the play.
The Company plans to commence drilling its second horizontal well in the area in December and is in the early planning stages for a 2012 development drilling program.
This is an exciting new light oil discovery that has the real potential to be a company maker
In addition, TriOil continues to execute an active horizontal drilling program in its core light oil project at Lochend.
It recently drilled, completed and tested a Cardium horizontal well with a 21 stage slick water completion.
The well flowed hydrocarbons over a 101 hour period at an average rate of 593 barrels per day of oil and 1.1 mmcf of natural gas per day, for a total average of 784 barrels ofoil equivalent per day, with a water cut of 5% and a final flowing wellheadtubing pressure of 2,750 kPa.
TriOil owns a 50 percent working interest in this well and 3 potential development locations on the section. The Company also ownsworking interests ranging from 50 to 100 percent in several sections on trend with this well.
Based on the initial test rate performance and flowing wellhead pressure this is the strongest well the Company has drilled at Lochend to date and expect the well to exceed the current type curve for the play.
TOL plan to equip this well and bring it on production in November. Additional wells are being planned to delineate and exploit the Cardium in this area of the Lochend Cardium trend.
An additional Cardium horizontal well was completed and brought on productionin the third quarter. The Lochend well, which TriOil has a 100 percent working interest, was drilled and completed and yielded a 30 day initial production rateof 144 boe per day (85 percent oil), very close to our type curve for this partof the Cardium trend.
Taken together, these new wells will more than double Tri-oils lite oil production to over 1300 barrels per day and should boost netbacks to the $50 per barrel level.
That is, annual cash flows will be at or above $1 per share at the 2011 exit production rate of 2000 barrels per day.
This, at 5 times cash flow, places our fair market value at about $5 per share.
This is close to the current NAV excluding the ressults of these new drilling sucess and new lite oil discovery.