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We
successfully completed our 2008/2009 winter drilling
program and met our objectives by drilling 6 wells, 3 of
which were drilled on our oil sands permit in order to
provide technical data to support the required
Department of Energy regulation to convert our 5-year
oil sands permit into a 15-year primary lease. In
addition, three wells were drilled further to the North
of the above-mentioned 3 wells and the 3 horizontal
wells previously drilled by our former Farmout partner,
Signet. Signet subsequently merged with 1350826 Alberta
Ltd. a wholly owned subsidiary of Andora Energy
Corporation (hereinafter referred to as “Andora”).
Andora is a private company approximately 53% owned by
Pan Orient Energy Corp. We own approximately 4% of
Andora’s issued and outstanding shares. These three
northern wells, drilled by us, continued the delineation
of the main reservoir trend and confirmed that the main
reservoir continues north. We are evaluating the many
options for production now available to us to decide the
best course of action. Drilling on these 80% owned lands
has opened new avenues for testing and further
development of the Sawn Lake project. On the 12 sections
of the jointly held lands, in which we have a 40%
working interest, our Company is exploring different
plans of action with Andora, the operator of these 12
sections. The focus of our Company’s drilling program
is to define the heavy oil reservoir to establish
reserves and to determine the best technology under
which oil can be produced from the Sawn Lake project in
order to initiate production and generate a cash flow.
We are
currently in the process of evaluating various enhanced
recovery technologies for a test well project located on
our Sawn Lake oil sands property, which is subject to
regulatory approval, Board of Directors approval,
financing, successful reservoir evaluation and modeling,
and other risks associated with the oil sands industry.
Existing
infrastructure is in place to accommodate the earliest
stages of production; however, additional capacity will
have to be added as the project grows.
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