Derek Resources Corporation reports the first sale and shipment of oil from the LAK Ranch.
Equiva Trading Co. (formerly Shell & Texaco) took delivery by truck today of 201 barrels from the LAK Ranch plant site. The oil had an API gravity of 23.8. Equiva will pay an additional US $0.50 per barrel over earlier quotes for LAK Ranch crude. LAK Ranch oil now receives a price slightly higher than the West Texas Intermediate (``WTI'') benchmark. Future oil sales will be completed as a matter of course.
Typically, SAGD (''Steam Assisted Gravity Drainage'') operations take several months before oil production occurs, so the early production and sale of oil from LAK Ranch is very positive. Several months of operations will still be required before significant production is achieved.
The company began cyclical steaming of the LAK well pair on March 10th and breakthrough communication between the wells was achieved on March 18. SAGD operations began on March 19, permitting steam to be injected through the upper well and condensed steam and oil to be collected through the lower, producing well. The system continues to be monitored very closely with adjustments and alterations being made as required. These adjustments are normal during the start-up months. The company is very pleased with progress to date at LAK Ranch and will provide further updates as the project advances.