Turner Valley Drilling Operations

WELLS: Crude producing 55; Drilling 20; Resuming drilling 16; Preparing to spud 7; Locations 12, TOTAL JULY 2nd: 110 wells.

FIELD POTENTIAL (Crude Oil) JULY 2nd: 50,000 barrels plus.

MERCURY ROYALTIES, located just southeast of Vulcan-Brown, resumed drilling during the week and is now more than 75 feet in the lime below 6,188 feet. WEST TURNER No. 2, north offset of big producer West Turner No. 1, reached the lime Thursday night at 6,701 feet. Drilling was halted at 6,724 feetand casing has been set. Drilling to completion will be resumed in a week. ROYALITE No. 32, next well expected to reach the lime, is drilling below 6,502 feet in the Dalhousie sands, about 250 feet off the lime. ROYALITE No. 31 reached the Home sand during the week at 7,040 feet, is now drilling below 7,193 feet, about 350 feet off the lime.

OKALTA No.6, important test well 1 ¾ miles west of Royalite No. 31 is believed at the top of the Home sand at 8,960 feet. The lime is expected at around 9,500 feet. PHILLIPS PETE No. 1, important North West Flank test, reached the Grit bed at approx. 6,750 feet and is now setting 6-5/8ths casing to the top of the McDougall Segur sand at 6,954 feet. The lime is expected between 8,200 and 8,300 feet.

Below the Grit bed and between 1,200 and 1,500 feet off the lime are COMMOIL No.1 drilling below 5,966 foot; SUNSET OILS No. 2, drilling below 5,727 feet; CONSOLIDATED No.1 drilling below 6,387 feet and YORK OILS No. 1, at present held up by stuck drill pipe at 6,147 feet. All the wells mentioned in the foregoing paragraphs are using heavy-duty rotary equipment.

Drilling was resumed at the weekend at WEST TURNER No. 3, RICHWELL and EXTENSION No. 1, after switching from standard to rotary equipment. West Turner is now drilling below 2,640 feet; Richwell below 2,100 feet; and Extension below 1,028 feet. BRITISH COLONIAL No 1, at 1,525 feet, is now changing from standard to rotary equipment. ROYAL CANADIAN No. 2 and PRODUCERS CRUDE No. 1, both standing with casing set below 3,000 feet, will move in rotary equipment next week.

Three more locations were announced during the week, SOUTHFIELD SYNDICATE, a Montreal group have taken an option from the C & E CORPORATION on the southeast quarter of 13-19-3w5, about two miles north and a mile west of the South End proven area, and will commence its first well in this area in the near future. The success of Royalite No. 30 and Vulcan Brown has swung interest towards the northwest. In the heart of the proven area, LEASE HOLDINGS LTD. has taken over l.s.d. 2 21-18-2w5 from the HIGHWOOD SARCEE Company and will drill a well in the southeast corner of the subdivision. The location is a few hundred yards east of and between Westside and Brown No. 1. It is understood that a European group is backing the Company, which is headed by P.J., Hatterman van Oudenol, The third location announced was that for GRANVILLE OILS No. 2, to be located in the same l.s.d. as No. 1 producer, l.s.d. 16 29-18-2w5.

DAVIES PETROLEUMS LTD. have announced that the Company is disposing of half of its 60% interest in Davies No. 4 well in order to finance completion of drilling. The well is now drilling below 2,954 feet with rotary equipment. The Company is issuing 28% Net participating royalty plus 2% Net non-participating royalty. Division of interest in the well will therefore be: Gross Royalties to BRITISH TRANS CANADA OILS 30%, to Crown 10%. Participating Net Royalties 28%. Non-participating Net Royalties 2%. The Net revenue (60% Net) will be distributed to holders of the 28% Net participating until $3,200 has been repaid on each 1%. Thereafter the 60%, Net will be distributed 30% to Net Royalty holders and 30% Net to Davies Pete. The cable rig from Davies No. 3 is now being installed at the Davies No. 1 producer, and a start will be made next week at cleaning the hole of cavings and sludge in an effort to increase production. Davies No 3, bottomed at 3,220 feet, is cased to bottom and will resume drilling with the rotary from No. 4 after the completion of that well.

Saturday's complete Turner Valley drilling report follows. After each well name is listed: Present depth; Type of drilling rig (Rotary or Standard); Footage made during week; and Report on activity.