The acquired acreage is on trend with, but not a part of, the Covenant field, which was discovered in 2004. Covenant field currently produces approximately 7,000 barrels of oil per day from 10 wells. Articles published by third parties have estimated Covenant field's reserves at approximately 70 million barrels of oil.
The seller of the acreage retained a 20% working interest and a third-party oil company owns a 65% working interest in the acreage and will be operator of the majority of the acreage. As part of this transaction, the operator will pay 100% of Whiting's total drilling and completion cost for the first three wells in the project. These initial wells are located on seismically defined structures that are on trend with Covenant field. Drilling operations on the first of the three planned wells are expected to begin in the fourth quarter of 2006. Due to the number of distinct prospects on the acreage, the majority of the acquisition cost will be amortized ratably over the eight-year average lease term.
President and CEO James J. Volker commented, "This acreage acquisition and the carried working interest in the initial three wells provides Whiting exposure to an exploration play that we believe holds large reserve potential. Multiple structurally based drilling prospects have been identified on the acreage."
Whiting Petroleum Corporation is a holding company engaged in oil and natural gas acquisition, exploitation, exploration and production activities primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast and Michigan regions of the United States.
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