Kodiak Energy Inc. said Tuesday it has nearly completed its $5 million, 84 square-kilometer (52 square-mile) seismic program covering its Little Chicago Prospect located in the Mackenzie River block of the Northwest Territories. More importantly, the Calgary-based oil and gas company said the prospect could contain significantly more reserves than first expected.

An independent evaluation of the Little Chicago Exploration license was completed by a qualified engineering analyst. This report based its evaluation of potential reserves in only one of the several structures observed on the property. This report stated there could be up to 1 billion barrels of oil and up to 2 Tcf of natural gas in only one of the structures analyzed.

The new work completed by Kodiak on the 200,000-acre Mackenzie River block EL 413 potentially indicates, based on preliminary information received, that there may be up to 1 billion barrels oil and potentially up to 4 Tcf of gas, if all the identified zones are productive. Kodiak noted that these early estimates will require confirmation via the processing of seismic data acquired in March, along with the planned drilling programs for winter 2008/2009.

"The oil targets are interesting as they could provide early production while the Mackenzie Valley Pipeline moves through the regulatory process," Kodiak said in a release. "The Mackenzie Valley Pipeline Group, headed by Imperial Oil Ltd., Shell and ConocoPhillips, recently advised Kodiak that the pipeline would be routed through EL 413. This will substantially reduce development costs for the gas production."

Upon the completion of the 2007 seismic processing and the Thunder River acquisition (see Daily GPI, March 20), Kodiak's control or working interest will rise to 56.25% of the acreage. Upon completion of the drilling programs planned for 2008, Kodiak's working interest will increase via the farm-in to 78.12% per test block for each well drilled, with a rolling option to earn the same amount for the whole block.

The seismic work, which is now 95% completed according to the company, included the building of 2 kilometers (1.2 miles) of ice bridges and 140 kilometers (87 miles) of access ice roads to the work site. Despite temperatures averaging -35 to -55 degrees Celsius (and during critical stages, substantial equipment downtime) the project is virtually complete without accidents or incidents, within the planned schedule and most importantly within budget parameters, Kodiak reported.

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