Credo Petroleum Corporation, an independent oil and gas exploration and production company with significant assets in North Dakota, Kansas, Nebraska, Texas and Oklahoma, updated its Kansas and Nebraska drilling project.
Michael D. Davis, Chief Executive Officer, stated, "We have recently discovered six new oil fields in Kansas and Nebraska which we expect to have a meaningful positive impact on Credo's reserves, production and cash flow. Our initial analysis of the new fields indicates potential for about 25 direct offset locations. In addition, successful offset drilling should generate step-out locations. Credo's working interest ownership in the new fields ranges from 49 to 75 percent. For proprietary business reasons, we are not releasing specific information, such as locations, tests and production rates.
Davis continued, "Nebraska is a relatively new oil play for Credo where there is more opportunity to apply our regional concepts to higher potential wildcat drilling compared to the Central Kansas Uplift. For the last three years, we have been working to prove our technical concepts prior to ramping-up drilling to a level similar to our Kansas project. Among other things, we have been refining our 3-D seismic techniques and interpretations, and believe that we have made significant progress on cracking-the-code."
To date, Credo has shot over 200 square miles of 3-D seismic in Kansas and Nebraska and has drilled 110 wells in Kansas and 18 wells in Nebraska. The Company's drilling success rate is 40 percent, yielding "all in" risked adjusted internal rates of return (at current oil prices) of approximately 100 percent.
For fiscal 2012, the Company budgeted $9.8 million for drilling in Kansas and Nebraska, up 17 percent from last year. Forty five (45) additional oil wells are scheduled for the remainder of this year together with three new seismic shoots covering 66 square miles.
Davis continued, "Our Kansas and Nebraska asset is generally over-shadowed by our Bakken and Texas Panhandle horizontal drilling plays, and we believe its value and growth potential are generally under-appreciated.
"There is an important place in our portfolio for this scalable and repeatable project because it reliably builds cash flow, production and reserves while yielding rates of return that are superior to horizontal drilling plays. Our Kansas and Nebraska asset is now providing about one-third of Credo's revenues, and we believe it will continue to be a significant growth driver in achieving our goal for oil to represent 75 percent of our production volume mix by year end."
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