Strategic Oil & Gas Ltd. announced its first horizontal Muskeg well drilled after spring breakup, 11-24, produced at an average test rate of 545 boe a day (77% oil) over the first seven days. Costs to drill and complete the well were $3.9 million, down 25% from the company's average well costs in the play. Strategic began its summer drilling program on June 13 and has since drilled two wells and spud a third. The company intends to drill a total of five to six horizontal Muskeg wells as a part of its 2014 capital program. The company remains focused on proving up the Muskeg at Marlowe. With more than 100 sections with Muskeg potential identified to date, the company is positioned with a multi-year drilling inventory of more than 400 economic prospects. As with any new resource play, the company continues to move along the learning curve identifying opportunities to drive efficiencies, grow returns and increase well performance. The company has built the necessary production infrastructure to handle its expanding drilling program, enabling the company to connect a well within days of completion, which results in shorter payback on its invested capital. Muskeg production: The Muskeg 11-24 well was drilled and completed with a 13-stage frac and was the first well drilled on the western rim at Marlowe after breakup. Over the first seven days the well produced an average of 420 bbls a day of 37-degree API oil and 75 mcf a day of raw solution gas, or an oil equivalent rate of 545 boe a day. The well was tied into Strategics production infrastructure after a five-day test. By comparison, the previous Muskeg 10-24 well was drilled and completed with a 15-stage frac before spring breakup. Average production rates over the first 30 and 90 days were 560 and 420 boe a day, respectively. This well has produced 38,600 boe (60% oil) in three months and continues to outperform Strategics pre-drill estimates.

The company is encouraged by its recent success in this program and reaffirms its 2014 exit production guidance of 4,000 boe a day.