GeoResources, Inc. Completes Bakken Shale Acquisition
01 Junho 2009 - 7:24PM
Business Wire
GeoResources, Inc., (NASDAQ:GEOI), today announced an oil and
gas property acquisition in the prolific Bakken Shale trend of the
Williston Basin and provided an operations update.
On May 20, 2009, but effective April 1, 2009, the Company closed
an acquisition of producing wells and acreage in the Bakken Shale
trend of the Williston Basin. The acquisition was made through its
existing joint venture with Slawson Exploration Company. Other
participants in the acquisition include Northern Oil & Gas Inc.
and Lario Oil & Gas Company. The Company acquired a 15%
interest in approximately 60,000 net acres, and also acquired 15%
of varying working interests in 59 producing and productive wells.
The Company�s share of producing and productive wells adds in
excess of 300,000 BOE of proved producing reserves. This reserve
estimate excludes numerous proved undeveloped and probable
locations. Based on June estimates, the acquisition further adds
daily net production of about 180 Bopd. The Company�s net
acquisition cost was approximately $10.4 million, prior to
adjustments for post effective date net revenues. As a result of
the acquisition, the Company now has working interests in the area
ranging from 10% to 15% in approximately 100,000 net acres. Of
those total acres, approximately 59,000 net acres are located in
Mountrail County, with the remainder located in adjacent North
Dakota counties and in Richland County, Montana. The joint venture
is presently running one drilling rig and plans to add two rigs in
July and possibly a fourth drilling rig by the first quarter of
2010. We currently expect to drill or participate in 45-50 wells
over the next 18 months, exclusive of interests resulting from
nominal acreage contributions to non-operated units. The Company
expects to have an average net working interest in the range of 7%.
The acquisition was funded with cash and borrowings from the
Company�s Senior Secured Revolving Credit Facility.
Drilling and Operations:
To date, 16 operated joint venture wells have been drilled with
a 100% success rate. The Company has also participated in numerous
additional non-operated wells. The joint venture remains active and
has continued to acquire attractive acreage including the
acquisition announced above. Recent drilling activity includes the
Nightcrawler 1-17H (4.7% WI) flowing at 700 Bopd, the Banshee 1-1H
well (5.5% WI) flowing at 450 Bopd and 450 Mcfpd, with production
increasing as the well cleans up and the Wombat 1-25H well (8.5%
WI) which was completed in early May with initial production tests
of 800 Bopd. The Jericho 1-5H well (2.8% WI) completed drilling
operations in late February and is flowing up casing and producing
at 300 Bopd; production will likely increase by running production
tubing. Several other wells are awaiting fracture stimulation
including the Raptor 1-6H (10.0% WI), the Bandit 1-29H (7.5% WI),
and the Colt 1-16H well (9.1% WI). The Company is currently
participating in the drilling of the Mamba 1-20H (9.3% WI) which
spud May 9, 2009. Our drilling costs for Bakken Shale wells located
on 640 acre units have decreased significantly over the past year
due to reductions in service company costs, as well as improvements
in drilling and completion techniques. Recent single-lateral wells
have been completed for under $4.0 million which represents an
approximate 25% reduction in completed well costs since last year.
The Company expects this project to allow it to develop additional
reserves at reasonable costs. Further, management believes
additional upside can be realized through efficient drilling and
completion techniques and in-filled drilling within existing
spacing units, which has occurred in similar fields located in
Montana. Currently, our joint venture is developing the acreage on
640 acre spacing units; however, our involvement with other
operators has also placed us under 1,280 acre units. When the
initial development phase is completed and more historical
production information is available, we expect that many parts of
the field will justify incremental in-fill drilling.
COMMENTS:
Frank A. Lodzinski, Chief Executive Officer of GeoResources,
said, �This acquisition allows the Company to increase its interest
appreciably in a core and exciting operating area. It adds
immediate proved reserves and production and significantly expands
our drilling and development inventory. The Bakken Shale is a
premier oil play in the lower 48. Our drilling program has
continued to deliver positive results. We expect to continue to
develop our assets and selectively expand our acreage and drilling
inventory.�
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 the SEC reports
of the Company, our Annual Report on Form 10-K for the year ended
December 31, 2008, 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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