KNOC acquired the BlackGold oil sands lease in August 2006 and immediately began an exploration program to understand the potential for commercially viable oil sands resources. In the 2006-07 winter, KNOC drilled eighteen(18) exploration wells and one water test well. The company also conducted a 23 km2  3D seismic program. During this coming winter, KNOC plans to drill about thirty exploration wells and one to two water test wells. KNOC has employed local contractors to assist in the work conducted in the field to date and hopes to continue to expand these relationships in the future.

Based on the positive results of last year’s drilling and seismic program, KNOC is proposing to develop the BlackGold Project employing conventional steam assisted gravity drainage (SAGD) technology to produce the bitumen contained in the McMurray formation underlying its leases. This development will target daily production of 10,000 barrels of bitumen with the economic life of the project expected to be approximately twenty-five years. Further development is anticipated depending on the results of exploration and testing.

Environmental, engineering and exploration work is continuing to support regulatory applications for the project. Public consultation has also been initiated and KNOC seeks input from all stakeholders to ensure their interests and concerns are considered in the development of the project.