CALGARY, ALBERTA--(Marketwire - Sept. 13, 2010) - Celtic Exploration Ltd. (TSX:CLT) ("Celtic" or the "Company") is pleased to provide shareholders with an exploration activity update with respect to its recent drilling and completion results at Kaybob (Devonian Duvernay formation) and Fir (Triassic Montney formation).
Kaybob Devonian Duvernay
Celtic, as operator, has drilled and completed its first exploration horizontal well at Kaybob South targeting the Devonian Duvernay shale formation. The Company pooled eight sections of 100% interest lands with two other industry partners, ultimately taking a one third interest in 27 gross sections.
The well, which is located at 00/15-33-060-20W5, was drilled and cased over 42 days at a cost of $4.0 million. The horizontal lateral was 1,787 metres, which was 500 metres longer than originally planned, allowing the addition of two frac stages making the total planned frac stages to 13 and leaving a 175 metre interval, which could be fractured by perforating.
During the completion of the well, six stages were fractured over a time interval of 10 days. Each stage was fractured with approximately 100 tonnes of sand and 1,500 cubic metres of slick water. While attempting to fracture the seventh stage, it is believed that a rupture in the casing occurred at the heal portion of the horizontal leg preventing the fracture of the remaining stages. It was decided to flow test the well with the six stimulated stages while determining the feasibility of fracturing the remaining stages. Tubing and recorders were run and the well has flowed on test starting September 11th. Prior to the flow test, the well flowed on clean-up for a total of 140 hours.
After three days on test, the well is currently producing natural gas at a rate of 2.1 MMCF per day and 56° API condensate. The gas is liquids rich and is expected to yield total liquids of approximately 75 barrels per MMCF of raw gas including free condensate.
After completing the flow test, the well will be shut-in, allowing for build-up. Bottom hole pressure is expected to be approximately 50 MPa. Although the completion operations were suspended part way through the process, it is estimated that the well could have been completed with a 13-stage multi frac for approximately $3.0 million, without any operational difficulties. As a result, total drilling and completion costs would be approximately $7.0 million.
The Company is encouraged with the results from the first horizontal well and anticipates good economics with expected gas rates from a horizontal well with a complete 13-stage fracture. The high liquids content provides enhanced economics in the current environment where oil fetches premium pricing over natural gas.
The Company has commenced drilling a second well at Kaybob targeting the Duvernay formation. This well is at 100% working interest and will initially be drilled vertically, with the intention of taking it horizontal in the future. In addition, the Company may drill a third well targeting the Duvernay formation in 2010.
The Company currently owns 95,000 gross acres and 84,269 net acres (131.6 sections) of land with Duvernay rights at Kaybob and surrounding areas.
Fir Triassic Montney
Celtic has drilled and completed its first exploratory horizontal well at Fir, Alberta. The well tested at a final rate of 3.5 MMCF per day of natural gas and 250 barrels per day of light oil, although all of the frac oil had not been fully recovered at this point. The Montney gas at Fir appears to have a higher heating value than the Montney gas at Kaybob and therefore should attract higher gas price premiums to AECO. Celtic is pleased with the initial results from this well and will drill a second well prior to bringing the well to production. It appears that this new Montney pool discovery has a relatively high liquids yield, however, production results after several months will be required for an accurate assessment.
At Fir, the Company owns a 100% interest in 15,040 acres (23.5 sections) of land with Montney rights.
Advisory Regarding Forward-Looking Statements
This news release contains expectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operations or performance that constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking statements") under applicable securities laws. Undue reliance should not be placed on forward-looking statements. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements. We caution that the foregoing list of risks and uncertainties is not exhaustive. Events or circumstances could cause actual dates to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this news release are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.
All dollar amounts are referenced in Canadian dollars, except when noted otherwise. Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel and sulphur volumes have been converted to oil equivalence at 0.6 long tons per barrel. The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids ("NGLs"). NGLs include condensate, propane, butane and ethane. References to gas in this discussion include natural gas and sulphur.