Delta Oil & Gas Provides Production Update
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16 January 2007, 3:00pm ET
Additional Wells to Be Producing Shortly and Drilling Continues
Delta Oil and Gas Inc. (OTCBB: DOIG) is pleased to announce that since October 2006, it is cash flow positive and producing from seven wells. An additional six wells will commence production shortly. The company has no debt and approximately $1,500,000 cash on hand. This cash, along with revenues from production, is expected to be used to fund drilling operations for the next 12 months and to acquire additional drilling prospects. "We are overwhelmed to have achieved this success in such a relatively short period of time," said Douglas Bolen, President & CEO, "which success separates us from all the other development stage junior resource companies."
Todd Creek, Alberta
Production of natural gas has commenced at our Todd Creek Well located in 13-28-9 2W5 in Alberta, Canada. The 13-28 well was completed in June 2005 and initial log analysis showed that the well had intersected two gas formations with a combined net pay of over 80 feet. Preliminary natural gas reserve estimates for this well exceed 700 Million Cubic Feet of gas. We are anticipating initial production from this well to be approximately 500 mcf per day, of which Delta will receive its pro-rata share.
Our second well at Todd Creek (the "13-33") was spudded on December 31, 2006 and drilling to the targeted depth of 5,500 feet continues on schedule. It is expected that this depth will be achieved before the end of January 2007. The geological zone being targeted at this depth is known as the Cadomin formation. The Cadomin is a sandstone-conglomerate that sometimes exists as a thick alluvial fan up to 65 feet in thickness and could be spread out for several miles deep in the basin up to 15,000 feet. This well is located very close to the Gas Processing facility so it is expected that once the drilling rig is released, the well, if commercially productive, can be tied into the production facility within approximately 45 days.
Owl Creek, Oklahoma
The oil discovery at the Powell #2 well in Owl Creek, Oklahoma continues to flow naturally under its own pressure. The well's production has ranged between 100 to 150 barrels of oil per day and 45 to 55 mcf of gas per day. From its completion in late June 2006 to the end of December 2006, this well has produced in excess of 24,000 barrels of oil and over 6,700 mcf of gas drilling and logging of the Isbill #1 well has been completed. Based upon the logs, it was decided not to complete the well. The information gained from this well has been used to reinterpret the geology of the Owl Creek field and has delineated several additional offset locations to the Powell #2 well.
Wordsworth, Saskatchewan
The horizontal well drilled earlier this summer in the Wordsworth area of Saskatchewan, Canada has produced approximately 25,000 barrels of oil to the end of November 2006. At last report, the well continues to produce in the range of 200 barrels of oil per day. Gas production from the same well is approximately 50,000 to 100,000 cubic feet per day. A second well is expected to be drilled in the first quarter of 2007.
Palmetto Point, Mississippi -- 10 well Program:
The operator has completed the 10 well drilling program in Palmetto Point, Mississippi. Of the ten wells drilled to date, 8 have been completed, two have been plugged and abandoned. Production from 4 of the eight wells to the end of November 2006 totaled 37,447,000 cubic feet of natural gas. Production is expected to increase due to the installation of a compressor and completion of additional pipeline connections. Mentioned Last Change
DOIG 1.05 0.08 (8.24%)
We are extremely pleased to have had an 80% success rate on this first drilling program.
In addition to the ten wells described above, we acquired a 10% interest in two additional Frio wells, previously drilled by the operator and located in the same area, both of which were successful wells. They are currently shut in and waiting to be tied into the nearby pipeline.
Based on the success of the initial ten well drilling program, in August 2006, we entered into a joint venture agreement to acquire an interest in a drilling program comprised of up to 50 natural gas and/or oil wells with the potential of multiple zones of pay.
Cache Slough, California
In November 2006 we sold all of our interest in two wells at Cache Slough near Sacramento, California for $1,500,000. The company's original investment in these two wells was approximately $432,000 representing a gain on sale of over $1,068,000. An independent evaluation of the two wells was completed by a contract geologist and our Board of Directors determined that the price as offered represented the fair market value of our interest and amounted to a good return on moneys spent to date on these wells.
Management decided that this sale fit squarely within the business objectives established by the Company in that the funds received from this sale, rather than from actual production over time, can be immediately reinvested in additional drilling prospects to enhance return on equity. Given the success Delta has had in the Sacramento Basin, management will continue to focus on finding additional drilling prospects in the California region.
Strachan, Alberta
The operator of the Strachan gas well elected to complete the well and issued the final AFE (Authorization For Expenditure) for the well. Since we paid this AFE, there have been ongoing discussions as to whether or not completion will actually be done. Further testing and review of the drilling logs and previous test results are needed before that decision is made.
About Delta Oil and Gas
Delta Oil and Gas is a growing exploration company focused on developing North American oil and natural gas reserves. The Company's current focus is on the exploration of its land portfolio comprised of working interests in highly prospective acreage in the Southern Alberta Foothills area, its interest in the Strachan Prospect, its interest in its Mississippi prospect, its interest in a horizontal oil well in Saskatchewan and its interest at Owl Creek, Oklahoma. Delta Oil & Gas is seeking to expand its portfolio to include additional interests in Canada and the USA.
On behalf of the Board of Directors,
DOUGLAS N. BOLEN, B.A., LL.B., President
Safe Harbor Statement
This news release includes statements about expected future events and/or results that are forward-looking in nature and subject to risks and uncertainties. Forward-looking statements in this release include, but are not limited to time frames, expectations for completion; the analysis of results and the intention to drill. Actual outcomes and the Company's results could differ materially from those in such forward-looking statements. Factors that could cause results to differ materially include general factors that affect all companies that explore for oil and gas, such as the uncertainty of the requirements demanded by environmental agencies, the fact that oil and gas extraction and production is risky, the potential that no commercial quantities of gas are found or recoverable, the price of oil and gas, geological problems that prevent us from reaching drilling targets and specific risks such as the Company's ability to raise financing.
Distributed by Filing Services Canada and retransmitted by Market Wire
Contact Info:
Greg Werbowski
1.866.355.3644
Email Contact
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