Surge provided the results of its third horizontal multi-frac well at Valhalla South and to announce the closing of its previously announced light oil asset acquisition in North Dakota. Surge also announced that it has syndicated its bank facility and increased its bank line from $90 million to $120 million.
Operations Update at Valhalla South
Surge's third horizontal well (14-19-74-8W6M, 53.5 percent working interest "WI") in the Valhalla South Doig light oil pool (40 degree API) has been successfully drilled and completed. The well encountered approximately 1,000 meters of Doig Formation and was completed with ten frac stages averaging approximately 30 Tonnes of proppant per frac. A five day flow test on the well has been recently completed, resulting in flow rates averaging 1,450 boe/d (77 percent light oil and NGLs) with the last day of the test flowing at a rate of 1,225 boe/d ( 77 percent light oil and NGLs). The well produced through the 114mm (4.5") tie back liner which is currently being replaced with a more optimum production string of 89 mm (3 1/2") tubing.
This very encouraging result compares very favourably to the previously disclosed flow test on Surge's second horizontal well at 2-7-74-8W6M (100 percent WI) which averaged 945 boe/d (85 percent light oil and NGLs) over a similar five day flow period, with the fifth day flowing at 835 boe/d (79 percent light oil and NGLs). The 2-7 well has since been flowing for more than a month with a first month average rate of 635 boe/d (80 percent light oil and NGLs). The last day of the first month, the well flowed at 615 boe/d (80 percent light oil and NGLs).
Surge has identified at least 22 gross (15.8 net) more horizontal multi-frac locations to drill into the pool and has budgeted to drill, complete and tie-in at least three more wells this year. Drilling of the next well is scheduled to spud later this month.
In addition to its operations at Valhalla South, Surge has budgeted four more Bluesky light oil wells at Windfall and ten more light oil Spearfish wells planned at Waskada to achieve its 2011 exit production estimate of 7,500 boe/d (greater than 70 percent light/medium oil & NGLs).
Closing of the Second Light Oil Asset Acquisition in North Dakota
Surge is pleased to announce that it has closed its second light oil asset acquisition in North Dakota. As previously disclosed, the first light oil asset acquisition in North Dakota closed on March 31, 2011. The assets from both acquisitions were acquired by Surge Energy USA Inc., a wholly owned subsidiary of Surge Energy Inc.
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