Drilling Begins on Kern County, CA Gas Prospect

Vancouver-based Ivanhoe Energy and its partners reported that on Aug. 23 they began drilling a deep test well on the Northwest Lost Hills (NWLH) prospect located in Kern County, CA. The Aera Energy LLC-operated NWLH 1-22 well is expected to find natural gas and gas condensate zones in the deep Temblor formation.

The NWLH 1-22 well is located about five miles northwest of the Berkley discovery, which was completed to a depth of 19,700 feet and flowed natural gas and condensate at high rates during testing. The Berkley East Lost Hills No. 1 well began producing in February at a rate of approximately 15 MMcf/d and 900 bbl/d of condensate.

"Success by the industry south of our Northwest Lost Hills location has demonstrated the potential for large natural gas reserves in the Central California deep-gas play," said Dave Martin, Ivanhoe Energy chairman. "A successful well at this location would confirm the deep Temblor gas reservoir at Lost Hills to be a major, world-class discovery. Further, the demand for natural gas and condensate is expected to remain high in California for the foreseeable future, assuring favorable prices and strong economics for the play."

Ivanhoe's geo-science team said it expects to encounter several productive gas sands structurally higher than in nearby East Lost Hills wells. Ivanhoe, which holds approximately 6,300 acres in the NWLH area, estimates its share of reserve potential to exceed 1 Tcf. The company said the wells are expected to have daily gas production potential from 15-to-20 MMcf/d. The NWLH 1-22 well, which is being drilled with the Nabors Drilling USA No. 633 rig, is expected to reach the top of the Temblor formation before the end of the fourth quarter and should take about six months to reach total depth of approximately 20,000 feet.

Ivanhoe's joint venture partners in the NWLH 1-22 well include the operator, Aera Energy, PYR Energy Corp., Westminster Petroleum, Inc., North Arm Resource Inc., and Ceniarth Inc. Ivanhoe owns a 37.5% working interest in this well and an approximate average of 44% within its entire acreage position.

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