The first horizontal well ever in the Marchand sandstone has been drilled. Although major difficulties arose with certain aspects of the drilling operation, a horizontal section of approximately 1300 was drilled. The section was left open hole as planned. The shales just above and between the Marchand sands appear to be very water-sensitive, requiring careful drilling practices. These shales were encountered in the middle part of the curve (45{sup o}-60{sup o}), which can be the most difficult part of a directional well to clean. Difficulties with these shales and cleaning this section led to a parted drill string, requiring a sidetrack. There were no major geologic ''surprises'', such as formation tops coming in much shallower or deeper than expected, or unexpected faults. Thin kaolinite beds were encountered in the horizontal section of the well. Previous descriptions of the mineralogy of this formation did not mention any kaolinite. The lateral extent of these beds is unknown. Completion of the well is under way. One additional injection profile was gathered during the quarter. Results are consistent with other recently profiles that show gas within the C Sand is overriding the oil and failing to sweep the deeper parts of the reservoir. International …

Progress on the East Binger Unit (EBU) project has slowed as difficulties have been encountered with obtaining satisfactory production from well EBU 37G-3H, the new horizontal well. Remedial operations have been conducted and stimulation operations were about to get under way at the end of the reporting period. International Reservoir Technologies, Inc. has made additional progress on the pilot area simulation model, reaching a point with the history match that we are awaiting more definitive production data from the horizontal well. Planning future development of the EBU hinges on evaluating the results of well EBU 37G-3H. Performance of this well must be understood in order to evaluate development scenarios involving horizontal wells and compare them with development scenarios involving vertical wells.