Tight oil reservoirs are already discovered oil pools with relatively low permeability where multi-fractured horizontal wells or other technologies are required to economically develop the property. A good example of this is the Bakken formation in Williston Basin (North Dakota, Montana and Southeastern Saskatchewan).

The Sleeping Giant oil project is located within the Williston Basin in Richland County in northeast Montana and produces light, sweet crude oil, associated gas, and negligible water from the Middle Bakken formation. It is our single largest crude oil producing property.

In late 2008 we suspended our drilling program at Sleeping Giant due to the significant drop in crude oil prices but continued with our refrac program given the attractive economic returns. As oil prices stabilized in the latter half of 2009 we resumed our drilling program and drilled two wells by year end along with a total of 19 refracs for total spending of approximately $25 million. We also spent $14 million primarily in assessment work in our new areas.

In 2010 we have allocated $117 million in development capital to our Bakken/Tight Oil plays with approximately $58 million to be invested in development activities at Sleeping Giant with another $54 million on assessment activities in our new areas. We plan to drill 31 net wells across the entire Bakken portfolio and expect to refrac 11 net wells at Sleeping Giant. We also plan to continue testing simultaneous fracture tests on multiple wells and an increased number of fracture stages per well at Sleeping Giant with up to 6 simultaneous fracs and up to 12 stages per well. We also plan to test a number of higher stage fracture stimulation projects in our new areas.

Key Statistics:

• 2010 expected production: 11,200 BOE/day (13% of total production)
• 2010 development capital plan: $117 million, 31 net wells
• 12% of proved plus probable reserves
• Reserve life index of 10.9 years

For further information on all of our resource plays, click here.

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