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Northcote (LSE:NCT), an onshore US oil and gas exploration and production company, has announced the successful fracture stimulation of the West Little Drum Well on its 51% owned Horizon Project, which has resulted in a significant increase in production compared to pre-frac levels.
Highlights:
– West Little Drum oil production increase of over 600% from pre-frac levels
– Oil production continues to fluctuate but the well reported an average of 40 (18 net) bopd for the most recent 7 days and an average of 35 (15 net) bopd over the entire 20 day post frac period
– Natural gas production at the four well Little Drum unit, which includes the fracked West Little Drum well, has increased from a pre-frac average of 43 Mcf/day (19 net) in September to an average of 118 (52 net) Mcf/day since resumption of natural gas sales and averaged 171 (75 net) Mcf/day for the first week of November, the most recent data available
– Frac completed at a gross cost of US$150,000 – expected to pay back from net operating cash flows within 90 days
– West Little Drum is the third of a four well frac programme for 2013 – the next well will be fracked before the end of the year
– Five additional horizontal wells on Horizon currently producing from the Mississippi Lime remain to be fracked
Northcote’s Chief Executive Officer Randy Connally said, “At IPO, the frac programme at Horizon was initially our core focus and we are pleased that the programme is delivering on its objective to significantly increase existing production at low cost and we look forward to completing the final frac of our 2013 programme before the end of the year.
“Reflecting on the substantial progress made since IPO, the frac programme is now just one part of our focus across what is now a much enhanced and diversified asset base covering over 4,000 net mineral acres. We are extremely excited by the development potential across our portfolio and expect to significantly add to our production, with our ongoing programme which includes the drilling of our first Mississippian horizontal well this year, as we rapidly advance towards our 250 BOEPD target.”
West Little Drum:
The frac at West Little Drum commenced on 9 October and was completed in line with expectations at a gross cost of US$150,000, substantially under original budget estimates. The approach to the West Little Drum frac was to stimulate the well by pumping approximately 5,000 barrels of water, along with certain chemicals and rock salt, into the well in multiple stages.
The well was put back on production on 13 October 2013, at which point it was principally producing the frac load water. As the bulk of load water was recovered, the well showed substantial increases in oil cut and whilst oil production continues to fluctuate the well produced 40 (18 net) bopd over the past 7 days and for the entire 20 day post frac period the production averaged 35 (15 net) bopd. There is the potential for production to increase further following the completion of the Little Drum pipeline project earlier this year. As a result of the increased water disposal capacity resulting from this project, the formation continues to de-water, which typically leads to increasing oil cuts over an extended period of time, permitting higher overall production rates.
Based on the actual cash cost for the frac of US$150,000, the well is expected to pay back on a net cash flow basis within 90 days, which is evidence of the strong investment rationale for the frac programme and evidence that production at Horizon can be increased in a highly cost effective fashion. The planning for the frac of the fourth well, the final frac of our 2013 programme, is well underway and will be completed before the end of the year. Further details on this will be provided in due course.
West Little Drum gas is reported as part of the Little Drum Unit, which means that the gas production from the unit’s four wells, including West Little Drum, is pooled and reported together, however we believe the frac has positively affected gas production. Since the frac, the entire Little Drum unit has reported substantially increased natural gas production from an average of 43 (19 net) Mcf per day in September to an average of 118 Mcf per day since resumption of natural gas sales and production averaged 171 Mcf/d for the first week of November, the most recent data available.
All of the technical information, including information in relation to reserves and resources that is contained in this announcement has been reviewed internally by the Company’s Technical Director, Mr. Kevin Green. Mr. Kevin Green is a Petroleum Geologist who is a suitably qualified person with over 30 years’ experience in assessing hydrocarbon reserves and has reviewed the release and consents to the inclusion of the technical information.
