2008 Overview
Fortress’ current production at Ladyfern is derived from the Cretaceous Bluesky and shallower Notikewin formations, which occur in this region at depths of 700-1,000 metres depending on the
target and specific location. The Company’s production averaged just under 4,000 mcf/d in 2008. No drilling capital was allocated to the area last year. Instead, the Company conducted an extensive
analysis of its area infrastructure with the objective of reducing operating costs and thereby improving netbacks. As a result of the analysis, the Company rerouted its production at Velma to a
different processing facility owned and operated by a senior producer. This facility and its gathering system operate at lower pressure than the previous arrangement. Going forward the Company
expects to realize more reliable throughput as well as a decrease in transportation and processing fees.
In addition to rerouting the Velma production volumes, Fortress has identified several well workover opportunities at Ladyfern North, which should offset natural production declines at this
property. The Company has also identified and booked reserves to 45 future development locations in the shallower Notikewin Formation across its Ladyfern properties. These development locations will
be drilled when supported by commodity prices. The primary purpose of these wells will be to mitigate expected production declines.
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