DEEP WELL OIL & GAS, INC. Deep Well Oil & Gas, Inc. announced the completion of its first Steam Assisted Gravity Drainage (‘SAGD') horizontal well pair. Joint venture partner, as operator, has successfully completed the SAGD horizontal well pair for the demonstration project at Sawn Lake, Alberta. The wells were drilled to a true vertical depth of approximately 650 meters and have a horizontal length of about 780 meters.
Work is anticipated to begin shortly on the building of the steam generation, water handling, oil treating, water source and disposal facilities, along with pipeline tie-ins between the production facility and water source wells. Steam operations are expected to begin in early January, with first oil production anticipated in the first half of 2014. As previously announced, Deep Well entered into a farmout agreement with MP West Canada SAS (the "Farmee"), two listed companies based in Paris, France, to fund share of the Alberta Energy Regulator approved SAGD Project at Sawn Lake heavy oil reservoir in the Peace River oil sands region of Northern Alberta.
The Farmee has informed that it plans to transfer its interests in the Farmout to MP Energy West Canada Corp. In accordance with this Farmout Agreement, the Farmee has agreed to provide up to $40,000,000 in funding for portion of the costs for the Steam Assisted Gravity Drainage Project, in return for a net 25% working interest in 12 sections where Deep Well has a working interest of 50%. The Farmee has since paid CAD 12,073,513 to the operator of the SAGD Project for the Farmee's share and Deep Well's share of the initial costs of the SAGD Project.
