Devon Energy Corporation said Tuesday it has spent $200 million US to acquire oil and gas properties in the Iron River area 190 kilometres northeast of Edmonton.
Oklahoma City-based Devon said the purchase from ExxonMobil Canada Energy includes 208 net sections of heavy oil leases and 51 net sections of conventional oil and gas leases, encompassing about 67,000 hectares.
The properties are located adjacent to Devon's Manatokan field, which produces 7,000 barrels of oil per day from about 300 wells.
The company said about 85 per cent of the wells drilled in the Manatokan field have been successful and it believes the adjacent land has the same geology, reservoir characteristics and oil quality.
"We pursued this acquisition because of Iron River's similarities to our Manatokan field and the success we have enjoyed there," said Stephen Hadden Devon's senior vice-president of exploration and production.
"It represents several years of low risk drilling, including 70 locations that are drill-ready today," he said. "We can generally drill year-round in the Lloydminster area and we plan to have four or five rigs running at Iron River in the third quarter of 2005."
The company said Iron River is expected to add about 700,000 barrels of oil equivalent to its production this year.
Over the next four years, Devon said it plans to drill more than 800 wells on the properties, boosting production from the current level of less than 3,000 barrels a day to about 30,000 barrels a day by 2010.