Fox Petroleum announced that natural gas production from its Spears Gas Unit 2, Well #1 in the Gomez Field, in Pecos County Texas.
Initial test production is in the region of 2.5 million cubic feet per day, of which Fox Petroleum will take 22.5%, or over half a million cubic feet of gas per day. The revenue stream from the well should generate over $1,000,000 a year for Fox.
The development of this project represents a successful start to a longer term program of drilling and workovers in this region and a realisation of Fox Petroleum's ambition to become an Exploration and Production company with a revenue stream in its first year of operation.
Stratco, the operating company on behalf of the group, were able to perforate a zone between 16,000 to 17,000 feet early this week. After shutting in the well for pressure build overnight, the well came back on at the increased rate of 3,600psi. Production tubing has been run and connected downhole, the kill fluids have been displaced and the well has now been opened up again for production and the commercial sale of natural gas.
Initial test production is in the region of 2.5 million cubic feet per day, of which Fox Petroleum will take 22.5%, or over half a million cubic feet of gas per day. Stratco Supervisor Tom Stratton, is currently testing flows at various choke sizes to optimize the gas flows into the sales pipeline.
"The well did not yield easily and only through the perseverance of the experienced crew under Tom, were we able to overcome the problems presented by removing a very stubborn tubing string left behind by the previous operator. This, plus the high winds and un-seasonal weather in the region, led to some delays but did not deter us from our objective, which has now been achieved. We are delighted at the results of this well and it augurs very well for the program of similar activity we have planned in West Texas for 2008." said Fox CEO Richard Moore.
Aside from the currently producing zone, Fox still has the option to perforate several other prolific zones in the well, including sidetracking further downhole to the exciting Fusselman target.
The project began in November of 2007 and consisted of reworking of a historically producing gas well. The success of the Spears Gas Unit 2 re-entry represents a move to production status for Fox and provides a revenue source which will enhance Fox's ability to participate in additional drilling and projects.
"The revenue stream from the well should generate over $1,000,000 a year for Fox. With this encouragement, we aim to participate in other similar small projects in 2008 with an aim to increase revenues 6 fold by the end of the year. Although the well was somewhat delayed by operational problems involving the extraction of damaged tubing, we still expect to see a five-month payback of our investment. That pleases us greatly." said Vice President, Finance, Alex Craven.
"Production from a first project is monumental for a junior exploration company, and this venture allows us to demonstrate to the market and the industry that we intend to maintain an aggressive drilling program to establish Fox as a key player in the industry. Nothing else shows that we mean business more then production results" explains Fox CEO Richard Moore.
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