American Petro-Hunter announced that the #24-1 Double H well commenced oil production on January 4th.
The Initial Production Rate (I.P.R.) has reached levels of 240 BPD equivalent (10 barrels per hour) at between a 75% to 98% oil cut. The oil to the tanks is actually being limited due to high gas pressures and gas flow estimated at 150,000 to 200,000 cubic feet per day levels (150-200 MCF per day). The operator is working to contain the gas as soon as a tie-in to a nearby pipeline can be accomplished. The high gas pressures have not dropped sufficiently to allow the free steady flow of oil to the tanks at this time. However, once the gas is contained the Company will achieve a definitive assessment of stable production rates which are indicated currently at over 200 barrels per day.
The Company will report when further data on daily rates are received from the operator and will closely monitor production over the next 30 to 60 days. Predicting actual rates is approximate and the total barrels per day produced may exceed or be less than calculated therefore oil pumped to the tanks is the most accurate assessment of any early stage producer.
In related news, an oil purchase contract has been executed with N.C.R.A. (National Co-op Refinery Assoc.) of McPherson, Kansas to purchase all production at the Rooney lease. The Company and operator have negotiated a premium to Kansas common oil prices reflecting the value and quality of the 44 degree oil being produced at Rooney. Also, NGPL-Midcont gas prices are currently trading in the $6.20 per MCF range.
As previously reported, a review of the Rooney engineering and seismic data has indicated that this newly discovered oil and gas reservoir has a potential aerial extent exceeding the acreage of existing nearby oil fields in the area that have produced in excess of 2.5 million barrels of oil. If the Company is successful in its initial 10 well drill program and should the entire seismically indicated target prove productive, Rooney could mature into a full field development project offering a recovery scenario in excess of 3 million barrels of oil based on this comparative analogy.
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