Osage Exploration and Development, Inc. released an Operational Update on its progress in the Nemaha Ridge Project in Logan County, Oklahoma.
Osage's first horizontal Mississippian well, the Wolf 1-29H, began selling oil and gas in late February, and is currently producing at a sustained rate of over 300 BOE/D on a 20/64 choke. We have choked the well back to create additional backpressure as a means of reservoir maintenance and optimization. Our high liquids gas production has been very stable at good levels.
Osage's second horizontal Mississippian well, the Krittenbrink 2-36H, is still undergoing cleanup after the hydraulic fracturing operation. After the fracturing operation, the well flowed naturally until we installed a jet pump, during which time, production slowly increased to 65 BOE/D. As with the Wolf well, following the jet pump operation, we installed an electric submersible pump (ESP) in order to increase fluid production volumes. With the increased volumes, we encountered a significant amount of sand in the wellbore, a phenomenon which also occurred at the Wolf 1-29H when we first installed the ESP. We believe that the large amounts of sand encountered during flowback is due to the high degree of natural fracture porosity of the reservoir, a quality which we believe ultimately will yield superior production results.
Faced with additional sand in the wellbore, we removed the ESP and reinstalled the jet pump, which can handle wellbore sand better than the ESP. Within a few days the Krittenbrink was producing between 100-130 BOE/D.
Because we utilized non-toxic chemical tracers during the hydraulic fracturing operation, we have determined that every stage is not yet communicating with the wellbore. In an attempt to increase the rate of fluid production and communicate with the entire wellbore, we reinstalled the ESP briefly in early May then elected to switch to gas lift technology in order to better manage the cleanout of the sand.
We plan to continue cleaning the sand out of the wellbore with the gas lift pump until it is feasible to once again reinstall the ESP and produce at higher volumes. This will necessarily be a gradual process.
Despite early challenges, our optimistic outlook on the Krittenbrink 2-36H is undiminished. Similarly, the Wolf 1-29 twice sanded out completely during initial flowback, but once it cleaned up, the high initial production rates justified the incremental approach that we took.
Osage's third horizontal Mississippian well, the Davis Farms 2-5H, spudded May 27, 2012. We have drilled the curve, which is now cased and cemented. Drilling has commenced on the horizontal leg which is now in the Mississippian section that we have targeted throughout the play. We expect to complete the well on time and on budget.
Osage and its partners, Project Operator Slawson Exploration and US Energy Development Corp. plan to begin running two rigs simultaneously beginning September 2012 on the Nemaha Ridge Project.
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