GeoResources, Inc., (NASDAQ: GEOI), today provided an operations
update and announced that the Company’s borrowing base under its
bank credit facility has been increased from $135 to $145
million.
BAKKEN SHALE
The Company holds a proportionate 10% - 18% working interest in
approximately 110,000 net acres in the Bakken Shale trend of the
Williston Basin. Approximately 63,000 acres are located in
Mountrail County, North Dakota, with the remainder located in
adjacent counties. To date, the Company has realized a 100% success
rate with 34 successful wells drilled by its joint venture
operator. In addition, the Company owns minor working interests in
more than 125 wells within the Bakken/Three Forks play. These wells
have provided valuable information related to the development
economics, geology and drilling and completion procedures with
multiple operators at different locations within the basin. Our
joint venture continues to acquire acreage in this expanding play
and is currently running three drilling rigs and may occasionally
run a fourth drilling rig.
The following table and comments provide an overview of our
current and expected activities. The drilling schedule is subject
to change. Please refer to prior news releases for prior activity.
The Company reports joint venture and other wells where its
interests are meaningful, but generally does not report numerous
minor interest wells. With the significant acreage acquisition in
May 2009 and subsequent acreage additions, the pace of activity has
increased and we expect to participate in an estimated 60 joint
venture wells over the next 18 months, exclusive of the
participation in numerous minor interest wells.
WELL NAME SPACING UNIT
(Acres)
WI
IP (BOPD) 24-hr
test or status
Status (spud
dates are estimates)
3rd Qtr 2009
Minx #1-29H 640
9.90 % 1,283 Producing Coyote #1-32H 640 5.40 % 1,383 Producing
Tempest #1-14H 640 5.00 % 1,581 Producing Fox #1-28H 640 14.40 %
--- Completing Bazooka #1-20H 640 10.74 % --- Completing Zulu
#1-21H 640 13.08 % --- Completing
4th Qtr 2009
Skybolt #1-24H 640 5.40 % --- Completing Stallion #2-1-12H 1,280
11.70 % --- Drilling Goldeneye #2-2H 640 4.34 % --- Completing
Banshee #2-1H 640 5.41 % --- Drilling Howitzer #1-25H 640 14.40 %
--- Drilling Zephyr #1-36H 640 12.03 % --- 11/14/09 Ripper #1-22H
640 5.27 % --- 11/24/09 Cougar Fed #1-30H 640 12.19 % --- 11/28/09
Cannonball #1-27H 640 4.74 % --- 12/09/09
Two additional wells with a 5% and 8% working interest are
scheduled in the 4th quarter. In addition, 13 wells are currently
scheduled in the 1st quarter of 2010 where the Company expects to
have working interests in the 5% to 10% range; however, certain
wells may be deferred in favor of higher working interest
wells.
Completed well costs, including surface equipment and production
facilities for single lateral wells drilled on 640 acre units range
from approximately $3.0 to $3.5 million. Initial production rates
have continued to move upward as the number of frac stages
increase. Our recent wells have had 18 frac stages per well.
The majority of our wells has been and is expected to be drilled
on 640 acre spacing units. In our view, the economics are
attractive and acreage can be “proved up” and placed on production
on an expedited basis. However, we are scheduling 1,280 acre (and
some larger) spacing units and have numerous locations which may
result in or require such larger spacing units.
AUSTIN CHALK
The Company has re-started its successful exploitation of the
Austin Chalk Formation in Giddings Field, in Grimes County, Texas.
The Hutto Unit #1-H, which is a planned 7,800’ single lateral
location, did spud on November 6, 2009. GeoResources is the
operator and has a 52% working interest in this field. This
location and our next two or three locations will be on the
northwest side of our acreage block where we expect the reserves to
be more “oily” and result in about 50% oil and liquids. To date,
the Company has drilled 13 Austin Chalk wells and achieved a 100%
success rate. Our present inventory includes 22 proved undeveloped
and probable locations within the Giddings Field. Our working
interest varies from 37% to 53%. At present, we expect to
sequentially drill all locations with a single drilling rig, but we
may accelerate development pending continued success and commodity
prices.
MONTANA
In December, the Company will participate in the drilling of the
Anderson 1-32R well located in Richland County, Montana. This well
will be a replacement of the Anderson 1-32 which was a Red River
producer that had previously been plugged due to a mechanical
failure. At the time of the failure, the Anderson 1-32 was
producing approximately 55 Bopd and had produced in excess of 580
Mbo and 385 Mmcf. The operator estimates the well will spud on
November 18, 2009 with an expected total depth of 12,600 feet. The
Company has an 18.65% working interest in this replacement
well.
BANK CREDIT FACILITY
UPDATE
The Company also announced that the borrowing base on its $250
million bank credit agreement has been increased to $145 million.
In connection therewith, on July 13, 2009, the Company entered into
a Second Amended and Restated Credit Agreement with a term
extending to October 16, 2012. The borrowing base of the facility
was $135 million, subject to redetermination on November 1 and May
1 of each year. The participating banks include: Wachovia Bank,
Comerica Bank, BBVA Compass, U.S. Bank, Frost Bank, Bank of Texas
and Natixis.
Comments
Frank A. Lodzinski, Chief Executive Officer of GeoResources,
said, “We have re-started our Austin Chalk drilling program after a
suspension due to land matters and commodity prices, and expect
these activities to deliver production and reserve growth as they
have in the past. Our current development inventory includes at
least 22 locations where we have working interests ranging from 37%
-53%. Our acreage position exceeds 68,000 acres, a majority of
which is held by production and is prospective for the shallow
Yegua and for the Eagle Ford Shale, Buda and Georgetown Formations.
We will attempt to continue to expand our acreage position through
direct lease acquisition, asset and corporate acquisitions and
farm-ins. Our Bakken program continues to roll forward with
positive results and we continue to seek attractive acreage
additions in the Williston Basin. Finally, we are pleased to report
another increase in our borrowing base. Our strong cash flows,
earnings, and liquidity provide adequate funding for our capital
programs.”
About GeoResources,
Inc.
GeoResources, Inc. is an independent oil and gas company engaged
in the acquisition and development of oil and gas reserves through
an active and diversified program which includes purchases of
reserves, re-engineering, and development and exploration
activities, currently focused in the Southwest, Gulf Coast and the
Williston Basin. For more information, visit our website at
www.georesourcesinc.com.
Forward-Looking Statements
Information herein contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which can be identified by words such as "may," "will,"
"expect," "anticipate," "estimate" or "continue," or comparable
words. All statements other than statements of historical
facts that address activities that the Company expects or
anticipates will or may occur in the future are forward-looking
statements. Readers are encouraged to read our 10-K/A for
the year ended December 31, 2008 and the other SEC reports of the
Company and any and all other documents filed with the SEC
regarding information about GeoResources for meaningful cautionary
language in respect of the forward-looking statements herein.
Interested persons are able to obtain free copies of filings
containing information about GeoResources, without charge, at the
SEC’s Internet site (http://www.sec.gov).
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