Zapata Energy's oil production was up 13% in the second quarter of 2009 compared to the same period in 2008 as a result of prior year drilling and positive response to its Silver area waterflood. Currently 55% of the Corporation's production comes from oil and NGLs. Second quarter 2009 production, however, was marginally lower at 2,638 boe/d, compared to 2,757 in the second quarter of 2008, as certain gas wells were shut in due to low natural gas prices.
Oil prices are up 33% from Q1 and compared to natural gas are providing significantly better netbacks. Accordingly, Zapata is concentrating on its core East Central Alberta resource play where the company has significant original oil in place for development.
A 10 well program in this area is planned for the third quarter. This program will be eligible for the Alberta drilling incentive credits.
Also, encouraged by the initial results at its waterflood, Zapata is proceeding with an expansion program. Early management estimates indicate that this waterflood has the potential to contribute up to 2.0 million net barrels of additional recoverable oil reserves. The company owns other oil resource reservoirs in the area with high reserves in place and relatively low recovery to date which would benefit from this same waterflood program. In the future, recovery from these reservoirs may improve through the use of polymer floods or other tertiary recovery techniques.
Through continued focus on oil development it is anticipated that by year end oil and ngl will account for 60% of Zapata's average production.
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