Leucrotta Exploration Inc. (TSXV: LXE) announced Dec. 17 it added 6,400 acres (10 sections) of Montney lands contiguous to its current landholdings in the greater Dawson area of Northeast British Columbia for $5.7 million (C$6.6 million). The seller wasn't disclosed.

Including the new lands, Calgary's Leucrotta now has more than 170 net sections of Montney prospective lands in the area.

During the fourth quarter of 2014, Leucrotta drilled one Montney horizontal well (8-18) and is currently drilling the horizontal section of a second well (13-07). These are significant step-outs from Leucrotta's original Lower Montney well (B4-19) that has been producing for more than seven months.

Leucrotta's current production is about 2,700 barrels of oil equivalent per day (boe/d), 18% liquids.

The 8-18 well was drilled horizontally without logging or coring the vertical section due to time constraints pertaining to an area land sale. Certain mechanical issues were encountered during the testing phase. However, at the end of the test period, the well was flowing up casing at a rate of about 375 boe/d, 20% condensate, plus about 400 barrels per day (bbl/d) of frack fluid.

The well is now shut-in to gather pressure data and will be retested at some point to help further evaluate its potential. The well has established liquids-rich gas deliverability in the area and additional data will be acquired from the well to help evaluate the overall Montney project.

The 13-07 well was drilled vertically and cored before the decision was made to kick off the well horizontally. In the vertical section, the well encountered about 164 feet (50 meters) of net pay and better than expected porosity.

The drilling of the horizontal section of the well should be finished prior to Dec.25 and is scheduled to be completed in mid-January. Testing and evaluation of the well is expected to be released in late January or early February.

Leucrotta's 2015 budget will not be released until February. The company expects a conservative but flexible approach given the commodity and business environment. Initiatives for 2015 will include looking at opportunities to unlock capital invested in the gas plant and on furthering the Montney project in the greater Dawson area.