EnerJex has engaged Halliburton to stimulate three wells in South Texas that the Company successfully drilled and cased several months ago. One of the three wells was stimulated yesterday and the remaining two wells are scheduled to be stimulated today. EnerJex expects to announce initial production results from these wells in the coming weeks.
The three new wells are located in the Company's El Toro Project, which consists of more than 5,000 undeveloped acres in which EnerJex operates and owns working interests ranging from 40% to 48%. Each well was drilled to a true vertical depth of approximately 4,500 feet, targeting a formation that has produced more than 100 million barrels of oil in the nearby area since 1950. One producing well located on a lease directly adjacent to the El Toro Project was drilled in 1984 and has produced approximately 50,000 barrels of oil to date from the same formation targeted by the Company.
Each of the three new wells drilled by EnerJex is offset by successful oil-producing wells that were drilled in the El Toro Project during 2009. These offset producers achieved initial production rates of approximately 75 barrels of oil per day (BOPD) and averaged approximately 25 BOPD during the first 12 months of production. The rates of production from these offset wells provide an indication of the level of production that may be realized from the Company's three new wells, but the actual results of production from these wells may vary materially from that of the offset wells. EnerJex expects the gross cost to drill and complete each new well to be between $500,000 and $600,000. The Company owns a 40% working interest in each of the three new wells.
EnerJex's CEO, Robert Watson, Jr. , commented, "The Company experienced delays in scheduling stimulation services due to the frenzy of activity in the Eagle Ford Shale play led by Chesapeake Energy and EOG Resources. Despite this challenge, we are excited to to bring these new wells online during a period in which oil prices are higher. EnerJex's El Toro Project holds tremendous potential, and we have identified numerous infill drilling locations that directly offset successful oil producing wells drilled during the past two years."
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