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Garvin & Murray
Delta Oil & Gas entered into an agreement with Ranken Energy Corporation to participate in a five-well drilling program (the "2006-03 drilling program") at Garvin and Murray Counties, Oklahoma. Delta has agreed to take a 10% working interest in this program.
This was followed by another agreement to drill three wells in the same region (the "2007-1 drilling program"). Delta has agreed to take a 20% working interest in this program.
These decisions were based on the geological information provided to us and on the successes we have already enjoyed working with Ranken on the Owl Creek Prospect.
The 2006-03 Drilling Program
All five wells have been drilled. Upon completion and testing of all the wells, it was determined that three of the wells should be completed in anticipation of the production of hydrocarbons. Subsequent to completion of these wells, two are economically viable at this time.
Plaster #1
The first of these successful wells resulted from drilling to a depth of 6,807 feet in the Plaster Prospect. The Plaster #1 well encountered sizeable hydrocarbon showings in the 2nd Deese Sand interval and is now producing in excess of approximately 400 mcf of natural gas per day with small amounts of associated oil.
Dale #1
The second well which is currently producing is the Dale #1 which was a re-entry into an existing well. The total depth of this well is 5,400 feet and to date, the well has been producing in the range of 2 to 3 barrels of oil per day.
Elizabeth #1-25
The third well, known as the Elizabeth #1-25, drilled in the Meridian Prospect, has not yet produced anything and its viability remains unknown.
Although our success rate on the 2006-03 Drilling Program on a percentage basis was lower than expected, we are pleased with the production results from the Plaster #1 well. With the additional production from these two wells, we are increasing our cash flows from operations which is in keeping with our stated business model.
The 2007-1 Drilling Program
Hulsey #1-8
This prospect consisted of re-entering an abandoned well to re-evaluate two sands of the 1st Bromide sands and the top of the Viola lime. This well was originally drilled and abandoned in 1986 and an analysis of the logs indicates two potentially productive 1st Bromide sands. The 1st Bromide “C” sand at a depth of 4,796 feet has 4 feet of porous sand. Based on 3-D seismic, if the re-entry is productive, the prospect can be fully developed with the drilling of three additional offsetting wells to the south, west and southwest.
The re-entry to which we refer as the “Hulsey #1-8” was successfully completed and is presently producing oil in the range of 50 barrels per day and associated natural gas in the approximate daily amount of 50 Mcf.
Pollock #1-35
The purpose of this well was to drill a new well to test a potential oil and gas reservoir in the 1st Bromide “C” sand at a depth of approximately 5,800 feet. This well to which we refer as the “Pollock #1-35” in the N.E. Anitoch Prospect was drilled to total depth but testing revealed no economically viable hydrocarbon showings and as such, the well has been plugged and abandoned.
River #1-28
Location preparation for this well to which we refer as the “River #1-28” in the West Riverbend Prospect is nearing completion to enable drilling in the immediate future. The primary objective of this well is the Viola Lime with emphasis on the Trenton and Middle Viola porosity development. Other wells in the area are productive with both oil and gas. The targeted depth of this well is approximately 4,000 feet.
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