Ann: Bird 13-18 Well Continues to Intersect Oil, page-23

FPL is drilling oil wells in an established oil field which it owns.  They are proceeding in a deliberate slow very scientific manner which is proving very successful in unlocking the oil reservoirs in their oil field.

The Florence Oilfield, located in the southern DJ Basin, was discovered in 1876 and has produced over 15 million barrels of oil.  This oilfield produces from the fractured Pierre Formation from 3000' to 3700'.  Initial production (IP) records have shown that some wells have come into production at between 200-500 bopd with no water production.  The fractured shale wells have a relatively high decline rate in the early stages of the well life.  The wells in the Florence Field continue to produce oil and their decline rate has levelled out in line with expectations of a mature shale producing formation.

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There is untapped potential in regionally productive reservoirs below the Pierre Formation including the Niobrara Formation which is actively being explored and produced by operators in the northern part of the DJ Basin.  The Niobrara Formation is an inter-bedded sequence of source rocks and limestones.  It has produced oil for many decades from vertical wells at modest rates in some oilfields north of Florence in the DJ Basin.Â

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In the last four years, the application of horizontal drilling and multi-stage fracture stimulation have resulted in a number of wells producing in excess of 1,000 bopd from the Niobrara Formation, with prognosed ultimate recovery per well in excess of 300 thousand barrels.  Fracced horizontal wells have been drilled successfully in nearby oilfields.  At this time Incremental does not have any development plans for any Niobrara resource that may lie within its leases.

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