Bronco Energy Ltd.
TSX : BCF

Bronco Energy Ltd.

January 21, 2008 08:30 ET

Bronco Provides Operations Update

CALGARY, ALBERTA--(Marketwire - Jan. 21, 2008) - Bronco Energy Ltd. ("Bronco" or the "Company") (TSX:BCF) is pleased to provide an operations update for its activities at Wabasca, Alberta. This news release includes an update on battery construction, gathering and sales pipelines construction, drilling and completions, stratigraphic test well results, production testing, enhanced oil recovery plans and the promotions of certain key personnel.

After a short break, Bronco's Rig #1 has resumed drilling operations on horizontal wells into the Upper Wabiskaw oil bearing formation near the town of Wabasca, Alberta. To date, Bronco has 40 horizontal wells drilled and completed, which will ultimately become oil producers and polymer water-flood injectors. Plans are to keep Rig #1 drilling for the foreseeable future at the rate of one horizontal well every six to eight days. Rig #2 is drilling for a third party in the Fort McMurray area and is expected to be operating for most of the first quarter of 2008.

During the fourth quarter of 2007, Bronco drilled two highly successful vertical delineation wells located near Wabasca, Alberta. The 14-24-80-25W4 well had excellent results. It encountered 22 meters of continuous, high bitumen saturation pay within the Grand Rapids Sandstone. The 6-32-79-22W4 well encountered seven and five meters of oil sands within the Upper and Middle Wabiskaw Sandstones, respectively. The Middle Wabiskaw core sample confirms the presence of an additional formation for the drilling and development of long reach horizontal wells on the Bigstone Cree Nation lands. Based on the positive results from this well, Bronco is now preparing to exploit the Middle Wabiskaw formation with horizontal drilling in early 2008. Bronco also expects to drill four additional vertical delineation wells in early 2008 to further expand the resource potential on the Bigstone Cree Nation Reserve lands.

The oil battery processing facility is near completion with commissioning and start-up scheduled for the middle of February 2008. The oil battery will allow Bronco to begin significant production from the 40 horizontal wells drilled to date. Initially the oil battery will be able to handle production of up to 6,000 barrels of oil per day. However, Bronco intends to add a second treater and additional sales oil tank capacity in 2008, which would increase the oil battery capacity to over 10,000 barrels of oil per day by year end 2008. In-field gathering pipelines and permanent facility construction on the horizontal well site surface pads is also near completion. Approximately 32 wells are expected to be completed, equipped, tied in and ready for production at the time of battery start up, with more wells to follow shortly thereafter. Construction of a six inch oil sales pipeline and 3 inch condensate pipeline from the battery to a major area sales pipeline and condensate supply line has commenced. Completion is expected for early February. The battery, well site facilities, in-field gathering lines and sales pipeline will minimize any trucking requirements for production fluids.

During the fourth quarter of 2007, Bronco was intermittently able meet its 2007 year-end targets of 700 to 1000 barrels of oil per day by test producing seven of its 40 horizontal wells. The average oil rate for November and December 2007 was restricted to approximately 400 barrels of oil per day due to challenging conditions and downtime caused by temporary test facilities. Permanent facilities are now being installed and will be ready prior to the battery start up, at which time production performance is expected to significantly improve. Based on the encouraging test results to date, Bronco reaffirms its prior forecast of 4,000 to 6,000 barrels of oil per day exiting the second quarter of 2008 from 40 wells, and 8,000 to 10,000 barrels of oil per day exiting 2008 from 70 to 100 wells. Bronco's production forecast assumes a conservative average first year production estimate of 100 barrels of oil per day per well.

Bronco has initiated evaluation work on a polymer waterflood project in the Upper Wabiskaw formation. As part of this enhanced oil recovery scheme, every second horizontal well is planned to be converted to a polymer water injection well. Recovery factors and oil production rates have dramatically increased by factors of 3 to 4 from offset projects in the same pool. Bronco has recently met with the facility and polymer suppliers and is making plans for polymer waterflood implementation in early 2009.

McDaniels & Associates Ltd. has been engaged to assess Bronco's year end reserves and values for the Upper and Middle Wabiskaw formations. The engineering report is expected to be completed and announced by the middle of February 2008.

Bronco Energy is also pleased to announce the expansion of the senior management team by way of the following promotions:

Mr. E. Stephen Terry, P.Eng., has been appointed to the position of Vice-President of Production. Mr. Terry has added tremendous value to the Company during the early stages of field development and will now play an expanded role in upper management. He will be focusing on the next phase of Bronco's growth as work begins on the implementation of enhanced oil recovery technology on the Wabiskaw assets.

Mr. Robert B. Ellis, P.Eng., has been appointed to the position of Vice-President of Engineering and will be building Bronco's reservoir engineering and exploitation department. Mr. Ellis' extensive management experience and expertise in reservoir engineering, heavy oil field development and exploitation will enhance Bronco's management capacity to meet plans for accelerated growth on its thermal recovery assets.

Both Mr. Terry and Mr. Ellis will become officers of the corporation upon approval by the Toronto Stock Exchange and will report directly to James V. Esposito, Bronco's Executive Vice-President and Chief Operating Officer.

Bronco is also pleased to announce the promotion of Mr. David W. Work, P.Geol. to the position of Senior Vice-President Geosciences in order to reflect his expanded role in corporate planning and governance as he builds Bronco's exploration and geological operations team.

Episodes of "The Rig - Oil Sands" have recently started airing on Outdoor Life Network every Wednesday evening. It showcases how our top field people drill Bronco's horizontal wells using Rig #1 in the oil sands as well as Bronco's unique relationship with the Bigstone Cree Nation people.

This news release contains forward-looking statements which involve known and unknown risks, delays and uncertainties not under Bronco's control which may cause actual results, performance or achievements of Bronco to be materially different from the results, performance or expectations implied by these forward-looking statements. Forward-looking statements such as the estimates of production, 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. In addition, there are numerous uncertainties inherent in estimating production, including many factors beyond Bronco's control, and no assurance can be given that the indicated level of production will be realized. In general, estimates of production are based upon a number of factors and assumptions made as of the date on which the estimates were determined, such estimates having inherent uncertainties. Bronco undertakes no obligation to update forward-looking information if circumstances or 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 W. Alford
    President and CEO
    (403) 699-8383
    (403) 693-0038 (FAX)
    or
    Bronco Energy Ltd.
    James V. Esposito
    Executive VP and COO
    (403) 699-8383
    (403) 693-0038 (FAX)
    or
    Bronco Energy Ltd.
    David L. Johnson
    VP Finance and CFO
    (403) 699-8383
    (403) 693-0038 (FAX)
    Website: www.broncoenergy.ca