U.S. Energy provided an update on its oil and gas drilling initiatives in the Williston Basin of North Dakota.
Williston Basin -- Bakken / Three Forks Formation
Rough Rider Prospect
U.S. Energy Corp. currently has 14 completed wells, 3 wells scheduled for completion in February and one well being drilled in the Williston Basin of North Dakota under the Drilling Participation Agreement ("DPA") with Brigham. To date our average initial production rate for the first 14 wells drilled under the DPA is 2,567 BOED.
Currently, U.S. Energy Corp. anticipates drilling four to six infill wells in its 2011 drilling program with Brigham. Four of the infill units have been identified as the Kalil 25-36 unit, the Sedlacek 33-4 unit, the State 36-1 unit, and the Lloyd 34-3 unit.
Yellowstone and SE HR Prospects
The Company announced an additional participation agreement in the Williston Basin in McKenzie County, North Dakota with private operator, Zavanna LLC in mid December 2010. The Company paid $10.95 million to acquire approximately 6,200 net mineral acres or 35% of Zavanna's collective working interest in two contiguous lease parcels known as the Yellowstone and SE HR prospects. Under the new program with Zavanna, the Company anticipates participating in 31 gross 1,280 acre spacing units (at various working interests up to 35%) with the potential of 93 gross Bakken and 93 gross Three Forks wells (based on three wells per formation per unit).
Zavanna initiated drilling of the first well in a three well program on January 15, 2011. The Cheryl 14-23 #1H well (35% working interest/~27% net revenue interest/Yellowstone Prospect) is currently drilling in the horizontal portion of the wellbore. The second well in the program, the Olson 8-5 #1H well (30% working interest/~23% net revenue interest/Yellowstone Prospect) is scheduled to be drilled after the Cheryl 14-23 #1H well reaches total depth and casing is set. The third initial well, the Colfax 3-10 #1H (13% working interest/~10% net revenue interest/SE HR Prospect) well is scheduled to be drilled after the Olsen 8-5 #1H well. Zavanna is currently planning to complete all three wells in the second quarter. The wells are planned to be long laterals to be drilled to an approximate total measured depth of 20,000 ft (~10,000 vertical / ~10,000 horizontal) and to be completed with approximately 30 fracture stimulation stages. As previously announced, Zavanna and its partners (including USE) are continuing their efforts to secure a full time drilling rig in the second quarter of 2011 to drill six to eight additional gross wells in 2011.
The Company's total acreage position and drilling inventory in the Williston Basin now total ~72,800 gross and ~22,400 net acres (including Montana), with the potential for 276 gross drilling locations in our two programs (based on three Bakken and Three Forks wells per formation per unit).
"We are pleased to announce our highest initial production rate well to date in the Williston Basin to start off 2011," said Keith Larsen, CEO of U.S. Energy Corp. "Between the two programs currently underway, we will have three additional completions in the first quarter and three in the second quarter, and we are planning to drill 10-12 additional gross Bakken wells for the balance of the year," he added.
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