GMX Resources Inc. has successfully drilled and completed its sixth operated horizontal Bakken well, the Johnston 31-4-1H, 55 percent working interest, located in Sections 4&9 Township 146N Range 99W in McKenzie County, North Dakota. The Johnston 31-4-1H was drilled to a measured depth of 20,979 feet with a lateral length of 8,869 feet. It was completed as a 34-stage frac Middle Bakken producer achieving a peak rate of 1,479 barrels of oil equivalent per day (boepd). The Johnston 31-4-1H had a spud to total depth of 29 days, a spud to rig release of 31 days and a spud to sales of 58 days.
The Company's seventh operated well, the Fairfield State 21-16-1H, was spud on May 13, 2012. GMXR currently projects a 96 percent working interest in the Fairfield State 21-16-1H, which is located in Sections 16&21, Township 143N, Range 99W in Billings County, North Dakota. The Fairfield State 21-16-1H is a Three Forks well and has been successfully drilled to a total measured depth of 20,979' and a lateral length of 9,510 feet. The Company expects to fracture stimulate the well in July 2012.
The Company's eighth operated well, the Basaraba 24-35-1H, is located in Sections 26&35, Township 144N, Range 100W in Billings County, North Dakota. The Company has received the necessary federal and states permits in this 50 percent working interest well, which we expect to spud in June 2012.
The Company has elected to participate in a number of non-operated wells within our Bakken leaseholds, and we continue to expect additional proposals for participation based on operators' permits obtained from the North Dakota Industrial Commission. An update on the non-operated wells follows:
The Logan 24-8H well, in which the Company has an approximate 17 percent working interest, located in Sections 5&8 Township 148N Range 98W in McKenzie County, North Dakota, was successfully drilled and fracture stimulated by Burlington Resources. The Logan 24-8H was drilled into the Middle Bakken and produced a peak flow rate of 1,170 boepd.
The Pojorlie 21-2-1H well, in which the Company has a 34 percent working interest, located in Sections 2&11, Township 146N, Range 98W in McKenzie County, North Dakota, has been successfully drilled and fracture stimulated via "plug and perforate" method by Continental Resources. The Pojorlie 21-2-1H was drilled into the Three Forks formation and is in early flowback with IP rate pending.
The Joliet 1-18H well, in which the Company has an approximate 14 percent working interest, located in Sections 18&19, Township 146N, Range 98W in McKenzie County, North Dakota, will be operated by Continental Resources. This well will target the Three Forks formation and has a planned total measured depth of 21,364 feet. The well is expected to spud in June 2012.
The Wilson 31-6H well, in which the Company has an approximate 14 percent working interest, located in Sections 6&7 Township 148N, Range 98W in McKenzie County, North Dakota, has been permitted by Burlington Resources (Conoco Phillips). We have elected to participate in the well and expect it to spud in early July 2012.
The Jair 31-28H well, in which the Company has less than a 1 percent working interest, located in Sections 28&33, Township 148N, Range 98W in McKenzie County, North Dakota, has been proposed by Burlington Resources (Conoco Phillips). We have elected to participate in the well and expect it to spud in early July 2012.
The following wells have received permits from the North Dakota Industrial Commission by other operators where GMXR has a working interest. These locations are permitted but have as of yet not been proposed to the Company.
The second quarter 2012 production is expected to be in a range of 539,000 to 543,000 barrels of oil equivalent, which includes 60,000 to 65,000 barrels of oil.
During the second quarter 2012 we continued to sell a portion of our unprocessed gas in the Carthage Texas area for a total price that is greater than the combined estimated price of residue gas and the net processing upgrade. Since the NGLs can be left in or extracted from the gas stream, we will continue to make gas dispatch decisions based on maximizing the total sales value of the hydrocarbons for GMXR.
Michael J. Rohleder, President said "the Johnston result is our sixth consecutive successful completion and continues to demonstrate the productivity of our acreage base. In addition, we continue to see other major operators obtain permits and submit proposals for our participation in wells in both McKenzie and Billings Counties. This activity by other operators validates the value of our Bakken leaseholds. As we add more wells, operated and non-operated, our production will become more predictable. This quarter we will double our oil production from the previous quarter despite changes in completion and work over rig scheduling. Given the recent decline in crude oil prices, it's relevant to report that we executed hedges and protected our revenues ahead of the decline, and we plan to continue being proactive in the use of oil and gas hedges to protect revenues."
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