Crimson Exploration Inc. announced the successful completion of the Mosley #1H (84.3 percent WI), its first horizontal Woodbine oil well in Madison County, Texas, at a gross initial production rate of 1,203 boepd, or 1,017 barrels of oil, 87 barrels of natural gas liquids and 595 mcf, on a 30/64th choke and 601 psi of tubing pressure. The well was drilled to a total measured depth of 15,650 feet, including a 6,300 foot lateral, and was completed using 23 stages of fracture stimulation.
Additionally, Crimson is actively drilling two horizontal wells targeting the Woodbine formation in Madison County, the Grace Hall #1H (82.4% WI) and the Vick Trust #1H (75% WI). The Grace Hall #1H, located approximately 1.2 miles north of the Mosley #1H, has reached a total measured depth of 16,000 feet, including a 7,500 foot lateral, and the Vick Trust #1H, located approximately 6 miles east of the Mosley #1H, is currently drilling at 11,469 feet toward a total measured depth of 15,200 feet, including an estimated 6,500 foot lateral. Both wells are expected to be completed with 20 – 25 stages of fracture stimulation. Production from these wells is anticipated to commence mid-second quarter. Upon completion of the drilling of the Vick Trust #1H, Crimson will move that rig to the A. Yates #1H (50 percent WI) location.
The Woodbine formation is a Cretaceous aged series of sandstones and siltstones that reside within the prolific Eagle Ford source rock and is generally described as being between the overlying Austin Chalk formation and the underlying Buda formation. The productive Woodbine sands in the Madison and Grimes County area are a lower porosity and permeability extension of the prolific 100 Mmbo Kurten Field in adjacent Brazos County. Previous to the current horizontal drilling and multi-stage frac completions, the Woodbine was developed through conventional vertical completions. The lower porosity and permeability in Madison and Grimes counties had a significant negative impact on initial rates and recoveries from these vertical completions; however, with the advent of horizontal drilling and multi-stage frac completions, a 10 – 20 fold increase in rates and recoveries are recognized. Crimson recognizes that this newer technology can also be applied to other formations that have historically low volumes associated with vertical or open hole horizontal completions, specifically the Austin Chalk, Buda, Georgetown, Glenrose and the other multiple sand lobes within the Woodbine formation.
Crimson has approximately 17,500 net acres in Madison and Grimes counties, Texas. Expectations are that this area will deliver a multi-year inventory of impactful and superior rate of return projects which will contribute significantly to Crimson's growth story. Crimson has a total of 9 wells planned for Madison and Grimes counties in 2012 and could easily expand that number with continued success. The net initial rate from the Mosley well represents a 28 percent increase in Crimson's current daily net oil production rate, illustrating the significant impact this drilling program provides. Overall, the Company believes that the estimated net potential, in the Woodbine alone, ranges between 30 - 40 Mmboe on the Crimson leasehold.
The Mosley's initial production rate places it in the top of its class of wells drilled to date in the area. The chart shows an average initial production rate of 679 boepd from 46 horizontal Woodbine wells drilled in Madison, Brazos, and Grimes counties since January 2009. The high average initial production performance of the offset wells demonstrates that this area is a repeatable and very economic source of oil production growth.
Allan D. Keel, President and Chief Executive Officer, commented, "We are very pleased with the results of the Mosley #1H and believe this success validates the quality of Crimson's position in the Madison and Grimes County area where we own approximately 17,500 net acres. We believe that recent drilling successes, and sale transactions immediately offsetting our acreage position in this area, implies the Woodbine represents current incremental value of $5 per share for the Company's shareholders, and could be worth two to three times that as we continue to develop the Woodbine. This estimated value also does not include additional value that could come from successful development of the Georgetown, Eagle Ford and other objectives believed to be prospective in the area. The coming months will be an exciting time for Crimson as we continue to pursue our plan for this area. We remain very optimistic that the increased cash flow attributed to our oil production in the Woodbine will begin to be reflected in shareholder value."
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