Sledge Hamar is the prospect area where Orchard had its first discovery last month. A second drilling location has been selected and permitting has begun with the well expected to spud in the next month.

The prospect is located adjacent to the Shell and Exxon/Mobil billion-barrel Belridge field in the Southern San Joaquin Basin in California and the second well will test thicker intervals in the deeper Olig Potter Sandstone where an oil column of over 200 feet was discovered in the first Sledge Hamar 1-7 well.

"This new exploration well will tell us a lot more about the extent of the Sledge Hamar discovery and how best to optimise its development. The combined oil column of over 700 feet in the first Sledge Hamar well in the Olig Sandstone and Diatomite intervals is a highly significant upside to capture. It is expected that a development program will involve hundreds of wells to fully develop this discovery," said Orchard chairman Steve Graves.

Besides appraising the new producing horizons the company will be gathering further information on the Reef Ridge/Diatomite intervals where over 500 fleet of good oil shows in a number of intervals were established in the initial Sledge Hamar 1-7 well.

The second Sledge Hamar well will provide a greater understanding of the characteristics of Olig Sandstones and assist in the planning of a multi well development program for both the Olig and Reef Ridge/Diatomite hydrocarbons. The development program is anticipated to start by the second quarter of this year.

"The Sledge Hamar prospect is proving to be a clear winner with the Olig Potter representing a new producing zone and the Diatomite a proven commercial success in the billion barrel Belridge Oil field next door. Nothing works better than to have shallow reservoirs next to infrastructure with robust economics firmly established by the likes of Shell and Exxon/Mobil."

Participants in Sledge Hamar 1-7 include Orchard 10%, Ivanhoe Energy 40% and Nahabedian Exploration Group, LLC 50%.