Aug. 17, 2010 (Filing Services Canada) -- Ironhorse Oil & Gas Inc. (IOG - TSX Venture), announces that it has completed construction of the Dawson flow line to a central oil battery, significantly increased its land holdings at Leon Lake, Saskatchewan and Jedney, British Columbia, received a favorable ruling from the ERCB with respect to the status of its previously drilled Nisku oil wells at Pembina, Alberta and has commenced drilling operations at Leon Lake.
Production for the second quarter of 2010 averaged 951 boepd up slightly from the first quarter average of 946 boepd. Currently, production is 1,050 boepd with a 70:30 natural gas to oil weighting.
Dawson, Alberta
The two (1.1 net) Slave Point oil wells drilled earlier this year were granted good production practice ("GPP") status in May subject to conserving associated solution gas. GPP approval allows Ironhorse to produce the wells at optimal rates using good engineering practices. Construction of the 3.6 kilometer flow line and associated facilities allows the oil and associated solution gas to be transported from the two oil wells to a central oil and gas processing facility. The two oil wells resumed production in late July at a combined rate of over 430 (235 net) barrels of oil per day.
Leon Lake, Saskatchewan
Ironhorse recently acquired an additional 5,120 acres of land in the Leon Lake area bringing its total land holdings in the area to 7,770 (7,123 net) acres. The lands are prospective for oil in the Upper and Lower Shaunavon formations.
In the first quarter of this year the Company successfully drilled, completed and placed on production the 7-21 horizontal oil well. The well was initially drilled vertically through both the Upper and Lower Shaunavon formations then horizontally through the Upper Shaunavon formation. The well is producing at a stabilized rate of 45 (35 net) barrels of oil per day with no water from the Upper Shaunavon formation.
The initial vertical well drilled to evaluate the 7-21 horizontal location also has indicated oil pay in the Lower Shaunavon formation. Analogous oil wells to the south of our lands are producing from the Lower Shaunavon formation at rates of 70 to 100 bbl of oil per day. Based on this information and our seismic data, Ironhorse has identified 25 potential horizontal locations targeting both the Upper and Lower Shaunavon formations on its acreage.
Ironhorse plans to drill 2 (1.75 net) seismically defined vertical evaluation wells at Leon Lake in the third quarter of 2010.
Pembina, Alberta
In July, the ERCB rendered its decision in favor of Ironhorse and its partners resulting from a hearing held in April 2010 with respect to the 2 (0.4 net) Nisku oil wells drilled in 2009 in Pembina. These two oil wells are capable of producing at more than 3,500 (700 net) boepd. We are currently estimating the oil wells will be placed on production in the second half of 2011 at restricted rates due to sour gas transportation and processing constraints in the Pembina area. The projected production start-up date has been postponed as a result of ongoing regulatory delays. We are working vigorously on a number of transportation and processing alternatives which would allow the oil wells to be produced at their full production capabilities in 2012. We expect to finalize these plans early this fall. Various factors including negotiations with industry partners and area residents together with further regulatory delays could extend the time lines for this project.
Jedney, British Columbia
Ironhorse recently acquired an additional 3,500 acres of land in the Jedney area bringing its total land holdings in the area to 6,303 (5,322 net) acres. The lands are prospective for Halfway, Montney and Doig natural gas. Earlier this year the Company drilled and completed a multi-zone vertical natural gas well in the Jedney area. The Company is currently evaluating various tie-in options for placing the gas well on production later this year. Based on our encouraging vertical production test results from the Montney formation and comparisons to recent Montney horizontal gas wells drilled in the Farrell Creek and Town areas we have identified up to 18 potential horizontal locations on our acreage.
For further information, please contact:
Rob Solinger
VP Finance & CFO
(403) 355-3620
rsolinger@ihorse.ca
or visit our website at www.ihorse.ca.
Ironhorse Oil & Gas Inc. is a Calgary-based junior oil and natural gas production company trading on the TSX Venture Exchange under the symbol "IOG".
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
Forward-Looking Statements
Statements throughout this release that are not historical facts may be considered to be "forward-looking statements". These forward-looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including management's assessment of future plans and operations, drilling plans and timing thereof, expected production rates and additions and the expected levels of activities may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and changes in the regulatory and taxation environment. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manor; and field production rates and decline rates. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this release are made as at the date of this release.
Boe Conversion - Certain natural gas volumes have been converted to barrels of oil equivalent ("boe") whereby six thousand cubic feet (mcf) of natural gas is equal to one barrel (bbl) of oil. This conversion ratio is based on an energy equivalency conversion applicable at the burner tip and does not represent a value equivalency at the wellhead.
Source: Ironhorse Oil & Gas Inc. (TSX-V: IOG) http://www.ihorse.ca
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