Reworking Wells, a Profitable Endeavor
February 24 2012 - 7:00AM
Marketwired
In a Forbes article from January of this year on the reworking of
old oil wells and the success of Energy XXI (EXXI), it highlights
how even a long producing well can be discarded by one of the giant
oil producers like Exxon Mobil (XOM) and reworked for a profit.
Energy XXI is not alone, several other oil and gas exploration
companies, like Lucas Energy (LEI) and AER Energy Resources
(PINKSHEETS: AERN) are using this model.
The article highlights how a tract of old wells, some producing
upwards of 50 years were discarded by Exxon and reworked,
resurveyed and are now producing 1500 barrels of oil per day. With
oil prices still at or above $100 per barrel, this is becoming an
increasingly lucrative way of exploring and extracting oil.
As the Washington Post article from yesterday highlights, "The
U.S. remains the world's biggest oil consumer, but government data
show that demand is growing the most overseas in developing
countries like China." This, along with tensions in oil producing
countries like Iran, could make the model of reworking older wells
a more common practice among smaller exploration companies.
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