Bronco Energy Ltd.

Bronco Energy Ltd.

October 18, 2007 08:55 ET

Bronco Provides Operations Update

CALGARY, ALBERTA--(Marketwire - Oct. 18, 2007) - Bronco Energy Ltd. ("Bronco") (TSX:BCF) is pleased to provide an operations update on drilling, completions, testing, facilities construction, the Grand Rapids evaluation and an upcoming television series involving Bronco.

To date, Bronco has drilled 31 of its proposed 50 Wabiskaw long reach horizontal oil well program. Bronco has also acquired four additional horizontal Wabiskaw zone wells for future enhanced oil recovery. The drilling operations utilizing Bronco Drilling Rig#1 continue to be successful with the average drill times per well ranging from five to eight days. Strong oil returns from drill cuttings are continually present while drilling the reservoir. Average reservoir capture to date is approximately 90% in the horizontal sections of the wellbores. Sand quality is characterized as "excellent" in 80% of the oil pay as measured by gamma ray count and "good" in most of the remaining 20% of the oil pay. Drilling is continuing at Wabasca with the program on schedule and on budget. A service rig has been secured by Bronco and is scheduled to begin completing and equipping additional horizontal heavy oil wells. Afterwards, the wells will be placed on production when Bronco's new oil battery begins operations.

Production testing from horizontal wells in the Wabiskaw zone is ongoing. One test well was started up in late July 2007, a second in August 2007, a third in September 2007, and four additional test wells on October 14, 2007. Due to stronger than anticipated fluid inflow it was necessary to increase the pump sizes twice, which resulted in some downtime. All seven test wells are now producing new formation oil in varying amounts. Results to date are quite encouraging, however it is still too early in the test production operations process to adjust Bronco management's previous guidance of a first year average of 100 barrels of oil per day per well. Some of the test wells have exceeded this target rate while others have not as they continue to clean up while producing drilling mud fluids and new oil production. None of the test wells have yet been optimized due to the early life of these wells and limited temporary test facilities. Wabiskaw horizontal production wells in this field typically have a forecasted 10 to15 year reserve life. Early stage drilling and operations results to date indicate that Bronco's wells fit this long life profile. Bronco intends to continue the production testing and is anticipating significant oil volumes for year end exit rates.

Bronco has received an Alberta Energy and Utilities Board facility approval for its oil processing battery. Construction is progressing as planned and the completion target date remains the first quarter of 2008. The current design calls for the handling of 6,000 barrels of oil per day. Bronco has begun sourcing a second treater vessel which will increase oil treating capacity to 10,000 barrels of oil per day at nominal cost with a relatively short construction period. The expansion will allow additional future horizontal wells to be produced to the battery. Field work at the battery site is on track and site preparation has been nearly completed including gravel, leveling and compaction. All major vessels and tanks are expected to be on site by the end of November 2007. A salt water disposal well at the site has been drilled, completed and successfully tested at injection rates exceeding 9,000 barrels of water per day. In-field gathering pipelines rights of way have been surveyed, environmental assessments have been completed and applications have been submitted.

Bronco is also pleased to announce that, effective October 1, 2007, it has retained Mr. Don Fox in the capacity of Production Superintendent. Mr. Fox brings 27 years of diversified field production operations exclusively in the Wabasca field including primary heavy oil production, polymer waterfloods, thermal recovery methods and oxygen firefloods. He recently supervised over 50 people in the Wabasca field. Mr. Fox is a key addition to the Bronco team as his duties will include optimizing oil production from the horizontal wells, and ensuring efficient operation of the new oil processing battery.

An engineering report on the resource valuation for the Grand Rapids thermal zone is expected to be completed by McDaniels & Associates Consultants Ltd. ("McDaniels") by the end of October 2007. Phase 2 steam testing has been completed by Hycal Energy Research Laboratories Ltd. Bronco management believes the results to date are highly promising and is optimistic for the potential for a future successful thermal project. Oil recoveries from the core steam testing were high, water saturation low, and the presence of a thick cap rock was confirmed which should provide an effective ceiling trap for the formation of a steam chamber within the oil zone. Once Bronco receives the McDaniels engineering report, Bronco will assess recovery methods, additional stratigraphic test well requirements, EUB application requirements, and a potential pilot test.

Although there is a current downturn in the drilling industry, Bronco Drilling's utilization rate will remain strong throughout the winter drilling season. Bronco Drilling Rig #1 is expected to continue drilling horizontal wells at Wabasca throughout the winter. In a few weeks, Bronco Drilling Rig #2 is scheduled to begin drilling some of Bronco's winter vertical stratigraphic test wells at Wabasca. Some of the test wells are to further delineate the Wabiskaw zone, while others are to recover additional cores and data from the Grand Rapids zone. Additionally, Bronco Drilling has secured a 90 day drilling contract for Rig #2 with a third party for the upcoming winter drilling season.

Bronco also announces that it has signed a contract with Anaid Productions for a television series titled "The Rig Season 2 - Oil Sands". The first of thirteen episodes is scheduled to premier on December 26, 2007 at 9:30 p.m. ET on the Outdoor Life Network ("OLN"). The series of episodes will feature Bronco Drilling Rig#1 Manager, Mr. Don McPhee and his crew, and some of the challenges and successes they encounter while building, and then drilling Wabiskaw zone horizontal oil wells with Bronco's new telescopic double drilling rig. The show will also include management from Bronco and Bronco Drilling, and highlight the unique relationship with our joint venture partners, the Bigstone Cree Nation.

Mr. Brian Alford, President and CEO of Bronco, remarked, "It is an exciting time for Bronco and its shareholders during this high growth phase. Bronco's experienced team of professionals, office and field staff continues to perform at a high level and execution is evident on all fronts."

This news release contains forward-looking statements. Forward-looking statements such as the references to Bronco's exploration program and drilling program and capital expenditures relating to, and timing of, such programs are based on the opinions and estimates at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. There are uncertainties inherent in forward-looking information, including factors beyond Bronco's control, and no assurance can be given that the programs will be completed on time, on budget or at all. Bronco undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements.

Contact Information

  • Bronco Energy Ltd.
    Brian Alford
    President and Chief Executive Officer
    (403) 699-8383
    (403) 693-0038 (FAX)
    Bronco Energy Ltd.
    David Johnson
    Chief Financial Officer
    (403) 699-8383
    (403) 693-0038 (FAX)