Richards Oil & Gas Limited, (TSX Venture: RIX) is pleased to report that it has filed on SEDAR (www.sedar.com) its audited financial statements and related Management's Discussion and Analysis of the results of operations and financial condition for the year ended December 31, 2007. As part of this release, the Company is also providing an update of its 2008 operations.
2007 HIGHLIGHTS
- Increased average annual production volumes 65% to 149 boe per day up from 90 boe per day in 2006
- Increased unconventional coal bed methane ("CBM") proved plus probable reserves by 25% to 10.6 bcf (1,765 Mboe)
- Established a new Horseshoe Canyon CBM play in the Thorsby area of Alberta and both prior to and after year end 2007 substantially increased its landholdings at Thorsby with over 23 net sections of earned and optioned lands.
- Drilled and completed 19 (9.4 net) Horseshoe Canyon CBM wells on the Company's Thorsby, Morningside and Lacombe properties increasing current production levels to 230 boe per day
- Replaced declining conventional gas production with stable, long life CBM production (90% of current gas production is now from CBM versus 22% in January 2007)
- Recompleted 3 wells in the Morningside property adding over 300 mcfd (gross) of gas production from dry Horseshoe Canyon sand zones
- Enhanced financial flexibility by completing a $10 million private placement in August; the net proceeds of which continue to be applied to accelerate the development of the Company's Horseshoe Canyon CBM properties
- Maintained financial strength with working capital of $4.1 million and an available bank line of $1.5 million at the end of the December 2007
ARDLEY OPERATIONS UPDATE
The Company recently completed testing the multi-lateral horizontal well drilled into the Ardley coals on its Ansel property. As previously reported, this horizontal well was initially drilled in July 2007 and re-entered in December 2007 using an under-balanced drilling approach. The drilling operation resulted in the drilling of two main lateral legs which had a total of 350 meters of wellbore drilled underbalanced with no fluid loss. In March and early April 2008 this multi-lateral well was flow tested but to date there has been no appreciable gas flow. The Company will continue to perform pressure build up and flow tests of this well. The Company is also evaluating stimulation techniques which may be used to push fluids that were introduced to the coal during post drilling operations away from the wellbore and to enhance formation pressure and gas production.
It is still uncertain if the expected gas volumes from this multi-lateral well will justify tie-in and a long-term flow test. The initiation and timing of stimulation and pipeline activity will depend on further results from flow testing.
While not yet commercial based on initial flow rates, drilling cost and estimated production costs, the activity to date does demonstrate the existence of "dry" coal (no produced water), permeability, gas flow and that a horizontal Ardley well can be drilled with minimal fluid loss during drilling. The Company will continue to work to resolve the technical requirements of drilling the Ardley coals and will also complete a comprehensive analysis and model using data gathered from the 10 vertical and 2 horizontal wells drilled on the Ardley property. Richards Oil & Gas Limited's land position prospective for Ardley CBM is 37 sections (20 net) earned and 14 sections (7 net) under option. -- www.cnxmarketlink.com
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