Synergy provided information on its Margil, Cletcher and Haythorn wells in the Denver-Julesburg Basin.
On the Declar Farm-in, which includes six wells (Margil Wells) with a 100% working interest (WI) and 80% net revenue interest (NRI), the Company reported that five out of six wells have been successfully completed with the sixth scheduled for completion in mid-October. Four of the wells were completed in the Codell formation. The fifth well was completed in the Codell formation and the Niobrara A and B benches. Synergy's sixth well in the Margil drilling program, Margil 34A, will be completed in the J-sand formation within the next 10 days. All 6 Margil wells should be placed in production the week of October 24, barring any timeline set-backs for natural gas pipeline hook-up.
Synergy Reports that the three well Cletcher drilling program which the Company has a 100% WI and 82.5% NRI, have been successfully drilled. All three Cletcher wells were drilled to the J-sand and a determination of which formations to complete is currently under review. Synergy is awaiting gas line right-of-way confirmation prior to scheduling completion of these wells.
Synergy has successfully drilled four of five planned Haythorn wells, to the Codell formation. The remaining well is expected to be drilled to total depth by October 20. Completion of the Haythorn wells will be slated for the second week of November. Synergy has a 100% WI and 82 % NRI in these wells.
Ed Holloway, Chief Executive Officer of Synergy stated, "Today's results further confirm our ability to successfully execute our Wattenberg field development plan. Thus far in the first quarter of 2012 we have successfully drilled 13 wells with a 100% success rate, the strongest start of any quarter in the Company's history. We should exit our first quarter with 20 plus wells drilled."
Holloway continued, "It's important to note that the Synergy drilling program initially focuses on individual formations. That is, we tend to complete and produce a specific formation, set a bridge plug and move up-pipe to the next formation. It is in this initial phase that a majority of the well costs are incurred. We repeat the process and move further up-pipe until all formations; the J-sand, Codell and Niobrara have been completed and produced. While the individual results for each formation generate positive returns, the true benefits to our shareholders come when we co-mingle the production of all formations which will maximize our returns."
Holloway concluded, "The final differentiating factor between wells we drilled in previous years and the wells we are drilling today is related to our working interest. In previous years, Synergy captured only a portion of the working interest of each well. Today, more of our focus has moved to operations where we own and operate 100% working interest in the wells we drill. As we start to comingle the wells, we will have a 100% working interest in each well which, we believe will leverage our economies of scale for the purpose of maximizing our cash flows."
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