Zodiac Exploration Provides Completions update to 4-9 Well in Kings County, California and release of Q2 financial results
Calgary, Alberta CANADA, May 24, 2011 /FSC/ - Zodiac Exploration
Inc. (ZEX - TSX Venture), ("Zodiac" or the "Company") is pleased to
announce completion results from the Kreyenhagen formation in the 4-9
vertical test well located on the Jaguar prospect in Kings County,
California. Based on encouraging core and petrophysical log evaluation,
the Company decided to test the Kreyenhagen formation, which underlies
the Vaqueros formation. A 30 foot interval in the Kreyenhagen
formation was perforated to evaluate a brittle, low permeability,
oil-bearing and fractured siltstone. This interval was stimulated with a
water-based fluid and a volume of 195 barrels ("bbls") of 29 deg API
oil and 58% of the load fluid was recovered over a period of 9 days. The
oil rate, prior to shutting in for a pressure build up test, was 24
bbls per day with a gas to oil ratio of 368 standard cubic feet per bbl
and a load fluid recovery rate of 39 bbls per day.
As the Kreyenhagen formation is a secondary target, the Company did
not wish to conduct an extended test, which would require the continuous
unloading of the wellbore, as it would have further delayed the testing
of the primary targets. The Company is now moving uphole to complete
and evaluate the primary targeted zones in the Vaqueros and Whepley
formations. The operation is expected to continue through August of
Murray Rodgers, President and CEO, commented, "We are very excited
with the early indications of production from the Kreyenhagen
formation. By establishing oil productivity from 30 feet of a total 150
feet of equivalent siltstone in this well, the Company believes it has
identified a potentially important and significant new play type. These
test results indicate that even with a limited stimulation, these low
permeability reservoirs in the Kreyenhagen will flow at rates that are
typical of early non-optimized well completions in other more well known
resource plays in the US. Although the Kreyenhagen formation had
produced over 1 million barrels of oil from legacy vertical wells in the
Kettleman Dome Field immediately west of the 4-9 well, it was not known
whether productivity could be demonstrated from this formation on the
Company's lands. These siltstones represent potential reservoirs within
the Kreyenhagen formation. In addition to the thickness observed in the
siltstones on the 4-9 well they have also been observed to be
approximately 500 feet thick on an abandoned well bore located on
Company lands approximately 10 miles south of the 4-9 well. Further
evaluation will be required in subsequent wells to determine optimal
completion strategies and economic thresholds."
The range of thickness of 150 to 500 feet for the siltstones in the
Kreyenhagen formation noted above is not likely to be present across
100% of the Company's land holdings and therefore may not be prospective
on all of the Company's lands. The Company currently holds
approximately 87,000 net acres in the San Joaquin Basin, California.
The completion program for the 4-9 well has been expanded from the
original budget of $2 million to approximately $8 million in order to
more effectively test several intervals.
The Company is currently planning to begin drilling the 1-10 well,
which will be the Company's first horizontal well, in mid to late
June. The horizontal target has not yet been finalized but is expected
to be in the Vaqueros formation. Given the extended time to drill and
test the 4-9 well, the Company now expects to only drill and complete
the 4-9 well and be in the completion phase in the 1-10 well prior to
the end of its fiscal year, September 30, 2011.
Q2 Financial Highlights:
During the quarter, Zodiac incurred a net loss of $10.5 million,
made up of an $8.5 million impairment charge to its investment in Nova
Scotia and a $2 million operating loss. The impairment charge was taken
on the Company's Nova Scotia assets due to the recent de-emphasizing of
the project by the operator and Zodiac's continued intentions to focus
on its assets in California.
The Company spent $21 million on capital expenditures during the
quarter. Capital expenditures were principally associated with the
drilling of the 4-9 well, the acquisition of the Panther properties
(press released February 2, 2011) and the acquisition of a 160 square
mile 3D seismic database.
As at March 31, 2011, Zodiac had $28 million in working capital.
The Company has filed its Financial Statements and Management
Discussion and Analysis for the three and six months ended March 31,
2011 on Sedar at www.sedar.com.
Murray Rodgers will be presenting at the Developing Unconventional
Oil Conference in Denver, Colorado, on Tuesday, May 24, 2011. The
Company's corporate presentation can be found on its website at