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Sydney, July 4, 2006 AEST (ABN Newswire) - At report time (0600 hours on the 2 July, 2006 California time) the North Belridge 26-1H well had reached a depth of 10,247 feet in the vertical pilot hole and was drilling ahead slowly in the reservoir section. Coincident oil and gas shows commenced at 9,980 feet and continue to present depth of 10,247 feet. Mud weight was increased from 12.7ppg to 13.8ppg at 10,130 feet when gas entered the well bore.
The shows and reservoir cuttings are comparable to those obtained in the discovery well, some 2000 feet to the north-west. Although encouraging, the significance of the shows will not be known until the well is logged and the completed horizontal leg production tested.
NB26-1 is the first of 10 initial development wells planned on the North Belridge oil discovery, which is located in California, USA. NB26-1H is located close to the vertical discovery well which intersected three oil-bearing reservoir intervals totaling 170 feet at about 9,800 feet and is presently on production from the middle reservoir interval.
NB26-1H is programmed to be drilled vertically through the expected 170 feet of reservoir section to a total depth of about 10,600 feet. After wire-line logging the well will be plugged back to about 9,400 feet and a new hole kicked off directionally to drill horizontally along the selected reservoir interval for about 4000 feet. The well is estimated to take approximately 34 days to drill and case prior to rig release. A smaller rig will then be used to carry out reservoir stimulation and well completion operations to allow production testing to start. Subject to rig availability this is expected to take about 14 days.
The operator of the well is private USA Company, Texas Crude Energy Inc. There are no other listed participants in the development project.
Aurora Executive Chairman, Jon Stewart said: "North Belridge is a recently discovered oilfield and represents an outstanding opportunity for Aurora to participate in the development of a significant on-shore oil discovery during a period of high oil and gas prices. The second well in the 10 well development program is expected to start in August."
Background - North Belridge Oil Field The North Belridge Oil Field is a new discovery located in the prolific onshore San Joaquin basin of California. Based on the discovery well and seismic, the discovery is estimated by the operator to have potential P50 reserves of 60 million barrels of recoverable oil and 40 billion cubic feet of gas.
Aurora has a 32.5% contributing interest in the NB26-1H well and will receive 32.5% of the revenue until well payback, after which, Aurora's interest reduces to 16.25% (net revenue interest 12.1875%). The Operator's estimate of potential recoverable reserves from this development well is approximately 600,000 barrels of oil.
Based on an analysis of several months of production from the discovery well, the initial production rate from NB26-1H is estimated to be approximately 500 barrels of oil per day. Due to the nature of the reservoir, some water production is expected at the outset and this will continue through the life of the field. The water production does not vary with structural position of a well.
10 horizontal development wells are planned (subject to well results) to be drilled near the discovery well and controlled by existing 2D seismic. A 3D seismic survey, is planned to be acquired during drilling of the first 10 wells. The 3D seismic will be used to locate subsequent development wells.
Following the completion of the initial 10 well development drilling program, Aurora has the option to acquire a 7.5% interest in the balance of the Project for the payment of US$1 million and to participate on a 1:1 basis thereafter in respect of that interest. (Aurora would maintain its 16.25% interest in the initial 10 wells). Assuming successful development of an approximately 60 million barrel field, peak field production could reach in excess of 25,000 barrels of oil per day and Aurora's share of oil reserves would be approximately 5 million barrels. Further drilling and the planned acquisition of new 3D seismic will further delineate the significant additional reserve potential indicated by existing 2D seismic at North Belridge.
