The Jolly Ranch project, covering approximately 370,000 gross acres, comprises three areas, Jolly Ranch, Middle Mist and Mustang Creek, situated in Lincoln, Elbert and Washington Counties, Colorado. Nighthawk holds a 50% interest in the project and Running Foxes Petroleum Inc., the operator, holds the remaining percentage interest.
In July 2009, Schlumberger Data & Consulting Services completed an independent evaluation of the hydrocarbons in place at Jolly Ranch and concluded:
Five new vertical wells and one horizontal section, drilled using an existing vertical well, have been drilled on the Jolly Ranch project during the winter drilling campaign. This brings the total number of deep wells drilled on the Jolly Ranch project to 15, two of which will be utilised as water disposal wells. In aggregate, the 15 wells encountered in excess of 150 oil bearing horizons in conventional and non-conventional zones.
The results from the recent drilling program have demonstrated source rock and reservoir continuity of the Atoka and Cherokee shales. In addition, the estimated oil in place figures per well confirm or exceed those indicated within the independent report, thus reinforcing confidence in the financial viability of the Jolly Ranch asset.
The project has now advanced to a stage where completion techniques, refined over the past twelve months will now be applied to all the drilled wells. This will promote optimum production from this new oil play in the carbonaceous shales of the Atoka and Cherokee formations of the Denver Basin, the main focus of the project.
The current status of the wells drilled during the winter program is:
The Craig 4-33 well has been cased as a producer and completed in the Lower Atoka formation between 6,839 and 6,977 feet and tested at an average rate of 130 bopd over a sustained two week period. The well will now be placed on full production.
The Craig 10-28 well has been cased as a producer and is currently undergoing completion in the Lower Atoka formation between 6,885 and 7,132 feet and will be placed on production in early February 2010.
The Cherokee formation, which also encountered significant oil during drilling, will be completed at a later date to enable co-mingling of production.
The Craig 12-28 well has been cased as a producer and is currently undergoing completion in the Cherokee and Lower Atoka formations between 6,540 and 7,014 feet and will be placed on production in early February 2010. Oil production will be directed into a centralised tank battery for ease of shipment of sales, together with output from the Craig 10-28.
Larger volume centralised tank batteries are being deployed on the Jolly Ranch project in parallel with the expected increase in full-scale production as development continues.
The Craig 12-33 well has been cased as a producer, is currently undergoing completion in the Lower Atoka and Cherokee formations, between 6,543 to 7,077 feet, and will be placed on production during February 2010.
The Craig 15-32H, a 2,006ft horizontal section, was drilled off the existing Craig 15-32 vertical well. Three of the four zones were sand fracced with oil coming back during completion operations.
The well requires some mechanical remediation following these exercises which will be undertaken subsequent to the production focused completion exercises in the Cherokee and Atoka zones on the vertical wells.
The Craig 6-4 SWD was permitted and drilled as a salt water disposal well to reduce the operating costs of production and development. During drilling excellent hydrocarbon formations were encountered within the Cherokee and Atoka shales between 6,489 and 7,079 feet. Subsequently a twin production well has been permitted to be drilled at a later date.
Optimum completion methods for the wells have been refined over the last 12 months. It is intended to apply these techniques, where applicable, to the wells drilled prior to the winter campaign. Nighthawk intends to publish a full project status report during February 2010, encompassing an update on all wells, production profiles and a review of the ongoing 3D seismic programs.
David Bramhill, Managing Director of Nighthawk, commented: "We continue to be encouraged by the appraisal drilling results. Strong progress has been made and our understanding of the project has evolved. We anticipate regular news flow in respect of the project over the coming months."
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