Irvine Energy plc, the AIM listed oil and gas exploration and production company, provides an update of its continued progress and development at its Kansas, Oklahoma and Niobrara project areas.
Overview
- Initial Kansas well Rock 1-5 tests oil - sales expected in July 2008
- New oil prospects being identified in Kansas following Ayres 3D seismic interpretation - drilling inventory to expand accordingly in Q3 2008
- Initial vertical Woodford shale well Farrow 1-24 fracture stimulated and gas line installed to sales
- Initial horizontal Woodford shale well Jones 1-5H commenced drilling 29 May 2008, with test rates expected by August 2008
- Initial four CBM locations identified - drilling to commence in Q3 2008
- New compressor installed at Niobrara 23 May 2008 - additional development to commence in Q3 2008 with minimum 20 new drill wells
Irvine Managing Director Aaron Close said, “Our development continues at pace as we increase both our oil and gas production across the portfolio. We are advancing both our conventional, shale and coal bed methane targets, which all continue to look highly promising, with the potential to significantly enhance the value of the Company. With our financing in place we can rapidly develop our extensive portfolio located in the low risk environment of proven producing areas in the US. Importantly, we are bringing on stream additional oil production to take advantage of the strong price of oil, which will immediately impact our revenues.”
Kansas Project
The Rock 1-5 tested free oil from the Arbuckle formation on 21 May 2008 and surface facilities are being built with first oil sales expected next month. The well is an extension of a mature oil field, which importantly has a strong water drive. Production will be enhanced using an electric submersible pump (‘ESP’) to allow for total fluid withdrawals of 750-1,000 barrels of fluid per day. Oil cuts are projected to be in the range of 5-10%, which would equate to production of between 35 to 100 barrels of oil per day (‘BOPD’). Initial swab tests from 21 May 2008 indicated an oil cut of 10%. The oil is high quality sweet crude and will receive NYMEX pricing less approximately US$4.00. Payout on this well, in which the Company holds a 75% working interest, is expected to be less than six months.
Rock 1-30, the second well in the four well Rock drilling series, was drilled to a depth of 3,150 feet on 22 May 2008. This was a test of a higher risk virgin structure and did not find commercial hydrocarbons. After interpretation of the wireline logs run on 23 May 2008, it was decided not to set pipe. Total gross dry hole costs to explore this structure were less than US$150,000. This is consistent with the Company’s corporate strategy of low cost exploration to maximise return on capital investments.
Rock 1-32, the third well in the four well Rock 3D drilling series, is currently drilling ahead at 1,900 feet. It is being drilled in a more established producing area than Rock 1-30 and the Directors believe it should encounter results at least similar to the Rock 1-5 well. Structural indications in relation to offset productive wells have been encouraging.
Interpretation of Phase I of the Ayres 3D shoot is close to completion and has already identified several promising opportunities. A prospect inventory is currently being built to add to the drilling inventory in Kansas. It is anticipated that following drilling of the third and fourth wells on the Rock 3D, the rig will then move to the Ayres 3D area to begin drilling those prospects.
Oklahoma Project
Irvine’s first Woodford shale well, Farrow 1-24, was fracture stimulated on 20 May 2008 with 4,400 barrels of water and 68,000 pounds of sand. Currently the well is flowing back this load water and has recovered 1,440 barrels of the 4,400 barrels of fracture fluid. The gas gathering line has been laid and connected to the sales line. As the remaining fracture fluid is withdrawn, gas will then begin to produce and go to sales. Results will be reported in the next operational update.
The Company’s first horizontal Woodford shale well, Jones 1-5H, commenced drilling on 29 May 2008. Irvine will have an approximate 20% working interest, with other working interest partners in addition to Metro Energy who are the operators, being Williams Company (WMB) and Mahalo Energy (CBM.TO). The vertical pilot hole is completed and open hole wireline logs have been acquired. After evaluation of logs, the well will then be drilled horizontally for a lateral distance of 2,100 feet through the Woodford shale. Fracture stimulation and clean up of the well should take approximately 6-8 weeks. Production rates should be known by the end of August 2008.
The initial four Hartshorne coal bed methane (‘CBM’) locations have been selected and will be drilled in H2 2008. Mapping of the coal is complete and the resource assessment is currently in progress by Netherland, Sewell & Associates, Inc.
Niobrara Project
The new compressor at the Niobrara Project was installed 23 May 2008. Currently 18 wells are going to sales with four additional to be fracture stimulated and added to sales in early summer, bringing total number of producing wells to 22 (previous announcement dated 13 May 2008 stated 23 wells). Current plans are to drill a minimum of 20 new wells commencing in Q3 2008.
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