GeoResources, Inc., (NASDAQ:GEOI), today provided an operations
update.
EAGLE FORD
We recently successfully drilled and completed our first two
Eagle Ford wells in our operated project area in Fayette County,
Texas. The table below provides an overview of production results
to date from these wells:
Eagle Ford - Well Summary
Initial Production Data
LateralLength(Feet) # of
FracStages GEOIWorkingInterest
Daily OilRate(Bbl/d) Daily
GasRate(Mcf/d) Choke
Pressure(PSI) Flatonia E Unit #1H ~3,200 10 50.0 %
1,204 420 18/64" 2,525 Flatonia E Unit #2H ~4,800 14 50.0 % 1,242
480 16/64" 2,850
Although we initially produced these wells on the larger choke
sizes indicated in the table above, both the Flatonia East Unit #1H
and #2H have been flowing on restricted chokes of 12/64” and
10/64”, respectively, since first production. We have intentionally
restricted production rates on these wells as we believe that
producing on restricted chokes and at lower rates will reduce
decline rates and optimize reservoir performance. Excluding the
higher initial daily production rates above, the Flatonia East Unit
#1H and #2H have averaged 487 and 495 barrels of oil equivalent per
day (converting gas at 6 MCF = 1 BO) over the first 14 and 12 days
of production, respectively, with average gas-oil ratios of 700 to
800 cubic feet of gas per barrel of oil. Although, gas is currently
being flared from these producers, we expect to connect these wells
to a gas sales line within the next 60 days as we have recently
signed contracts with a purchaser who is installing a gas pipeline
through our project area.
We also recently completed drilling our third Eagle Ford well,
the Black Jack Springs #1H well, in which we have a 44.1% working
interest. This well was drilled with a ~5,900 ft. lateral and is
currently undergoing a 16 stage frac job. After drilling the Black
Jack Springs #1H well, the drilling rig was moved to drill the West
Cannon Unit #1H well in our Giddings Austin Chalk Field development
area in Grimes County. The West Cannon well is currently drilling
and should finish within the next few weeks. We expect this well to
be an “oily” Austin Chalk producer, with strong economics. After
drilling the West Cannon Unit, the rig will return to our Eagle
Ford project in August 2011 and will continue drilling Eagle Ford
wells.
Since April of 2010 we have acquired 24,000 net acres in the
Eagle Ford Trend with acreage primarily located in southwest
Fayette and northern Gonzalez counties. Our plan is to add a second
dedicated drilling rig in the fall of 2011 and a third rig in early
2012 and potentially a 4th rig in mid-2012. Our intent is to
significantly accelerate our Eagle Ford drilling in the second half
of 2011 and into 2012. As we move forward in our development of
this project area, we expect each of our operated rigs to drill
8-10 gross wells per year.
BAKKEN SHALE OPERATED
To date, we have drilled and completed four gross Middle Bakken
wells, and are in the process of drilling our 5th well in our
operated project area in Williams County, North Dakota. The table
below provides an overview of production results to date from three
of these four wells, as production results are not yet available
for the fourth well which is being completed:
Williams County - Operated Well Summary
Initial Production Data
Avg. Daily Production Rate (Boe/d)
(1)
SpacingUnit(Acres)
GEOIWorkingInterest Daily RateOil
Only(Bbl/d) Choke 30Days
60Days 90Days Carlson 1-11H 640 47.5 %
685 29/64" 235 236 224 Siirtola 1-28-33H 1,280 39.8 % 840 26/64"
341 266 - Anderson 1-24-13H 1,280 35.0 % 905 24/64" 363 - -
(1) Calculated as the average daily production rate for the
first 30 days each well is on production and excludes non-producing
days.
We experienced significant production downtime for the above
listed wells during the first half of 2011 due to abnormal weather
conditions in North Dakota. We recently installed a rod pump on the
Siirtola 1-28-33H well which significantly increased its daily
production rate. We expect to install a rod pump on the Anderson
well by the end of this summer, which should improve its
productivity as well.
Our fourth Middle Bakken well in the project area, the Muller
1-21-16H (30.9% working interest) was recently frac’d and we are
currently drilling out plugs prior to production. This well had a
vertical pilot hole drilled through the Bakken and Three Forks and
was cored in these intervals before drilling a horizontal lateral
in the Bakken. As suggested in prior releases, we intend to
evaluate alternative fracing methods and procedures, including
varying the number of stages and types of proppant used, as we
progress with our operated program. In the Siirtola and Anderson we
pumped 30 and 29 stages, respectively, incorporating both sliding
sleeves and plug and perf operations and using sand plus
resin-coated sand as proppant. The Muller well was completed
differently than the Siirtola and Anderson wells by utilizing a
100% plug and perf method with 38 stages and using 60% ceramic
proppant. We plan to complete our next two wells, being the
Rasmussen 1-21-16H (currently drilling with a 30.4% working
interest) and Rasmussen 1-25-36H (33.0% working interest), in a
similar manner to the Muller. It is important to note that, despite
the extra work that went into the Muller 1-21-16H well (i.e.
coring, 38 frac stages, etc.), the time frame from spud to first
sales will be less than 75 days. We will continue to improve our
drilling and completion procedures and efficiencies and the time
frame from our spud to first sales.
After drilling the Rasmussen 1-21-16H, we plan to move the
drilling rig back to eastern Montana and complete the drilling on
our Olson 1-21-16H (see further discussion below).
We recently added a second dedicated drilling rig to our
Williams County project area which is now on location and should
spud our sixth Middle Bakken well, the Rasmussen 1-25-36H, within
the next few days.
We plan to add a third drilling rig to this area shortly after
the end of this year. Our intent, similar to our Eagle Ford
project, is to accelerate drilling in the second half of 2011 and
into 2012. We anticipate a higher level of production from our
operated project area in the third quarter of 2011 compared to the
second quarter of 2011 due to less downtime on existing producing
wells with improved weather conditions and additional production
from new well completions. As we proceed in developing this project
area, we expect each operated rig to drill 9-11 gross wells per
year.
To date, we have acquired approximately 25,000 net acres in our
Williams County project area, generally representing a 47.5%
working interest, within an area of mutual interest (“AMI”) being
developed with industry participants. We are the operator for our
group. Assuming full development on 1,280 acre spacing units, our
group will have varying interests in 100 units.
BAKKEN SHALE
NON-OPERATED
In our non-operated program located in Mountrail and adjacent
counties in North Dakota, we have participated in 95 wells to date
drilled by our primary operator, Slawson Exploration Company, Inc.
(“Slawson”), with a 100% success rate. In addition, we own minor
working interests in numerous other wells operated by other
industry partners within the Bakken/Three Forks play. Slawson is
currently running five drilling rigs within our AMI and we continue
to seek to acquire additional acreage and well interests in this
project area.
Slawson, like other operators in the basin, experienced
significant weather related shut-ins and delays in bringing new
wells online during the first half of 2011. We expect Slawson’s
drilling and completion activity level on our acreage position to
accelerate in the third quarter of 2011.
The following table updates our prior operations releases
regarding our non-operated activities in the area. Generally, we
report only the wells operated by Slawson, but may include others
where the wells or our interests are meaningful. We do not report
many of our wells in which we have very small working interests.
The table below lists activity during the indicated quarters for
such wells, with subsequent production data, where available. This
table includes oil production only.
WELL NAME
SPACING UNIT
(ACRES)
WORKING
INTEREST
IP (BOPD)
(1)(24-HRRATE)
1st 30 DAY
AVG(BOPD)
1st 60 DAY
AVG(BOPD)
CURRENT
STATUS
3rd Qtr
2010
Armada Federal #1-14-13H 1,280 10.37 % 1,407 1,059 855 Producing
Goblin #1-26H 320 2.40 % 1,287 626 493 Producing Revolver #1-35H
640 1.90 % 1,373 823 571 Producing Mole #1-20H 640 7.70 % 615 485
402 Producing Silencer #1-29H 640 8.55 % 1,172 644 576 Producing
Jaguar #1-32H 640 13.50 % 1,120 570 426 Producing Muskrat Federal
#1-28-33H 1,280 6.51 % 1,050 558 671 Producing Vixen Federal
#1-19-30H 1,280 6.52 % 1,307 507 451 Producing Hunter #1-8-17H
1,280 6.08 % 1,293 1,043 Producing Submariner Federal #1-23-24H
1,280 12.57 % Completing Vagabond #1-27H 640 4.95 % 638 289 256
Producing Water Moccasin #1-34H-TF 640 5.70 % 569 279 241 Producing
4th Qtr
2010
Prowler #2-16H 640 5.86 % 725 452 408 Producing Bandit #2-29H 640
7.35 % 959 449 382 Producing Payara #2-21H 640 6.28 % 1,069 452 434
Producing Genesis #2-13H 640 8.51 % 1,297 738 Producing Loon
Federal #1-24-25H 1,280 4.84 % 1,402 958 Producing Mamba #2-20H 640
8.38 % 815 481 417 Producing Mustang #1-22H 640 4.75 % 738 479
Producing Nightcrawler #2-17H 640 6.67 % 1,068 890 Producing Hunter
#2-8-17H 1,280 6.08 % Completing
1st Qtr
2011
Alamo #2-19-18H 1,280 8.59 % 1,286 1,037 Producing Ambush #1-31-30H
1,280 12.66 % Completing Diamondback #2-21H 640 2.79 % Completing
Jughead Federal #2-26H 640 8.88 % 1,184 Producing Orca Federal
#1-23-26H 1,280 4.84 % Completing Cruiser #2-16-9H 1,280 10.80 %
Completing Dagger #1-10H 640 12.52 % Completing Jaguar #2-32H 640
13.50 % Completing Muskrat Federal #2-28-33H 1,280 6.51 %
Completing Wizard #2-35H 640 14.40 % Flow Back
2nd Qtr
2011
Jaguar #2-32H 640 13.50 % Flow Back Muskrat Federal #2-28-33H 1,280
6.51 % Completing Cannonball Federal #2-27-34H 1,280 3.50 %
Drilling Howitzer #2-25H 640 14.40 % Location Mooka #2-28-20H 1,280
9.94 % Location Mustang #2-22H 640 4.71 % Drilling Neptune #2-15H
640 5.68 % Drilling Probe #1-19-30HMB 1,280 3.64 % Location Sauger
Federal #2-22H 640 5.65 % Location Skybolt #2-24H 640 5.27 %
Location Athena #1-36H 640 8.00 % Drilling
(1) As used in the above table, “IP (BOPD) (24 hr. rate)” is
defined as the peak oil volume produced on a daily basis through
permanent production facilities that occur within the first few
days of initial production from the well.
MONTANA
In Richland and Roosevelt counties of eastern Montana, we have
acquired approximately 10,000 net acres (8,200 operated) where we
are the operator of 17 different 1,280 acre spacing units and have
non-operated interests in several additional spacing units. We
initiated our operated drilling program in Montana with the Wheeler
Ranch #9-16 (25.0% working interest), which is a vertical Ratcliffe
formation well, drilled to approximately 8,650’ in February 2011.
We anticipate completion of this well to occur in the next several
weeks when weather conditions permit us to move completion
equipment onto the well site. Ratcliffe producers in this area
typically have long lives with initial oil rates of 75 BOPD. A
direct offset continues to produce with cumulative production of
168,000 BO.
As indicated above, we plan to resume drilling operations on the
Olson 1-21-16H (31.375% working interest), located in Roosevelt
County, Montana, late this summer. As previously announced, the
Olson well was initially spud in April 2011 but drilling operations
were suspended because of mechanical and geo-steering issues. Since
suspension of drilling operations, we have reprocessed seismic data
and conducted additional technical analyses on the well which has
provided us with confidence that we can re-enter the well and
successfully drill and complete this well.
As previously announced, we have participated in three
non-operated Bakken wells in eastern Montana and are currently
participating in the fourth well, being the Slawson-operated
Squadron 1-14-15H (15.5% working interest), a 1,280 acre spacing
unit, which is currently drilling. The third completed well was the
Battalion #1-3H (23.4% working interest), a 640 acre spacing unit
which was completed in late May with an initial production rate of
approximately 670 BOPD. We have also participated in the Slawson -
Renegade 1-10H (25% working interest) and the Brigham Exploration -
Swindle 16-9 #1H (9.375% working interest).
QUARANTINE BAY, SOUTH
LOUISIANA
In Plaquemines Parish, Louisiana, our operating partner is in
the final stages of completing permitting and flow line work on the
SL 195 QQ #365 well, in which we have a 22.0% working interest.
This well should be producing by late July. As previously announced
this well has over 105’ of pay primarily from two sands and
therefore may require an acceleration well to fully deplete both
reservoirs in a timely manner.
MANAGEMENT COMMENTS
Frank A. Lodzinski, President and CEO of GeoResources, Inc.
commented, “We are very pleased with the initial production results
of our wells drilled in our Eagle Ford project area. We believe
these wells will prove to have very good economics, in line with
some of the best areas of the Eagle Ford trend. We will continue to
develop our 24,000 Eagle Ford net acreage position during the
remainder of 2011 and into 2012.”
“In the Bakken, despite the weather-related difficulties we
faced in the first half of 2011, we have continued to drill wells
that are effectively de-risking our 25,000 acre operated position.
We are currently evaluating differing completion techniques with a
goal of maximizing economics.”
“We look forward to both our Bakken and Eagle Ford positions
driving significant production and reserve growth in the second
half of 2011 and into 2012 as we continue to ramp up our rig counts
and improve operating efficiencies in each of these plays. We
believe our current plans will result in the orderly and cost
effective development of our acreage positions, but pending
industry conditions and commodity prices, we may very well
accelerate our current plans for adding drilling rigs. We are well
staffed and adequately capitalized and we look forward to executing
on the economic development of our asset base which will drive
shareholder value.”
ABOUT GEORESOURCES, INC.
GeoResources, Inc. is an independent oil and gas company engaged
in the development and acquisition of oil and gas reserves through
an active and diversified program that includes the acquisition,
drilling and development of undeveloped leases, purchases of
reserves and exploration activities, currently focused in the
Southwest, Gulf Coast, and the Williston Basin. For more
information, visit our website at www.georesourcesinc.com.
CAUTIONARY NOTE REGARDING FORWARD
LOOKING STATEMENTS
This release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
which are subject to risks and uncertainties. The forward-looking
statements, which address GeoResources’ expected business and
financial performance, among other matters, contain words such as
“believe,” “expect,” “estimate,” “anticipate,” “optimistic,”
“intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,”
“likely,” “continue,” and similar expressions. Examples of
forward-looking statements, include, but are not limited to: (i)
changes in production volumes and prices and future production and
development costs, (ii) projections of capital expenditures,
revenues, income or loss, earnings or loss per share, capital
structure, and other financial items, (iii) statements of our plans
and objectives of our management or board of directors including
those relating to planned development of our oil and gas
properties, (iv) statements of future economic performance and (v)
statements of assumptions underlying such statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made.
GeoResources undertakes no obligation to update or revise any
forward-looking statements.
A further description of these uncertainties and other risks can
be found in the GeoResources Annual Report on Form 10-K for the
year ended December 31, 2010 and other reports filed by
GeoResources with the SEC.
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