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B.C. junior puzzled why partners won’t test California deep well
Vancouver-based Ivanhoe Energy can’t explain why its partners in its Lost Hills well in California won’t pay to test the deep gas well that has been drilled down more than 20,000 feet.
Ivanhoe Energy chairman David Martin told the company’s annual meeting June 23 that he did not understand the logic behind not testing the well that was put on hold in 2003. “The operator has been looking for a partner to finish the well by testing it,” Martin said in response to a question from a shareholder.
Martin estimated that it would cost $3 million to $4 million to test the well which is operated by Aera Energy, a venture jointly owned by Shell and ExxonMobil, two of the world’s biggest oil and gas companies.
“The least cost would be the test,” he said.
However Martin said Ivanhoe is not willing to finance the test itself.
“We’re not prepared to do it,” he said. “We’ve got other things to do.”
Ivanhoe holds a 42 per cent working interest in the well and expects its stake to fall by up to half if a new partner is found to test the well under a new agreement. Stock jumps on Bakersfield well Stock in Ivanhoe Energy jumped sharply in mid-June after it reported it discovered natural gas at a California property in the San Joaquin Valley.
The North Salt Creek prospect, near Bakersfield, is estimated to hold more than 250 feet of oil and gas bearing formations that are capable of production, Ivanhoe said.
The company said it will follow up the find with future well locations to test additional zones.
The well is located near existing pipelines and Ivanhoe is discussing natural gas sales contracts with several potential gas purchasers in the area.
The company cut its 2005 capital budget earlier this year by nearly 40 per cent and will require additional funding to fuel its growth.
Ivanhoe, which keeps its books in U.S. dollars, said its capital spending will be $41.7 million in 2005, down from an earlier plan of $79 million.
—The Associated Press
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