The Cotton Valley sand section is characterized by multiple gas-bearing sands over a large interval, with gas productive net sand sections generally totaling one hundred to two hundred feet (100'-200') in thickness and with relatively low porosities in the range of seven to ten percent (7%-10%). The Cotton Valley sands typically require fracture stimulation to attain commercial rates of production, with a typical well draining approximately 40-60 acres. From the results of the Company's evaluation and analysis of the Cotton Valley Trend in the area of its acreage block, it is anticipated that initial flow rates after fracture stimulation should be within a range of 750 Mcf per day and 1,250 Mcf per day. The production typically declines at a high rate losing approximately 55% of its initial flow rate by the end of the first year. The decline rate decreases after the initial six months and forms a decline projection which typically lasts for twenty years or longer at reduced rates. Estimated Ultimate Recoveries ("EUR") for a typical Cotton Valley well range from 750 million cubic feet (750 MMCF) of natural gas to 1.25 billion cubic feet (1.25 BCF) of natural gas.
Of the eight wells the Company has drilled to date, seven have been perforated, fracture stimulated and tested and one well is currently waiting on fracture stimulation and initial production. The average initial flow rates from the seven wells has averaged approximately 1,100 Mcf per day per well. All of the seven wells are now on production and, while some of these wells have been online and producing for less than a full thirty days, the Company estimates the initial thirty day average daily production rate per well will be approximately 800 Mcf per day. The estimated average production rate for the initial thirty day period is within the range expected by the Company prior to initiating its drilling activities in the Trend.
PRODUCTION UPDATE - The initial wells from the Cotton Valley Trend are currently producing at a combined (gross) rate of approximately 5,000 Mcf per day or approximately 3,200 Mcf per day net to the Company. In the Burrwood/West Delta 83 Fields in South Louisiana, the Company shut in the entire field for approximately five days in September due to Hurricane Ivan. The Field has now been successfully restored to pre-hurricane production levels. Net production for the third quarter is expected to have averaged approximately 22,500 Mcfe per day, slightly below the previous estimate due to Hurricane Ivan. With the return to production of the Burrwood/West Delta 83 Fields and the addition of the initial Cotton Valley wells, the Company estimates current daily production volumes to be in a range of approximately 24,000 to 26,000 Mcfe per day. The current production volume estimates are approximately sixty-three (63%) percent natural gas and thirty-seven percent (37%) crude oil and natural gas liquids.
Commenting on the results, Robert C. Turnham, the Company's President and COO stated, "We are very encouraged by the initial results from the Cotton Valley wells drilled thus far. Our initial phase of development activity has been designed and the drilling locations selected, to not only add reserves and production volumes, but also to provide us with as much knowledge and information as possible regarding completion procedures and development potential of our acreage block. Initial flow rates from the wells drilled to date have varied, with the average being consistent with our expectations prior to initiating development activities. In addition, we are confident the information acquired thus far will assist us in improving development plans and procedures going forward, which we believe will further improve results over time. We are estimating we will have approximately fourteen to fifteen wells drilled in the Trend by the end of this year, which we believe will add additional reserve and production volumes, as well as assist us with our Cotton Valley development schedule and plans for 2005."
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