Chestnut Petroleum Commences Re-Entry Workover in La.

Chestnut Petroleum, operator, has targeted the Texaco Nickerson 21 in Calcasieu Parish, Louisiana for re-entry. Originally completed in 1965, the Texaco Nickerson 21 produced 52,000 barrels of oil and 2,212,900 mcf of natural gas—worth $15,484,500 at today's prices—until a tubing leak killed production in 1979. Its original operators, Texaco and Sun Oil, left the well shut-in and never repaired it because they considered it a small well at the time.

"The Texaco Nickerson 21 is a prime example of the opportunities available to increase production in older, established fields throughout North America," says Mark Plummer, president and founder of Chestnut Petroleum. "There's nothing wrong with this well other than an equipment issue that may be easily remedied. A cost-effective fix on this existing well may allow us to access proven reserves without the expense and risk of drilling a new well. Before it went offline, the Texaco Nickerson 21 well produced at 120 bbl of oil and 400 mcf of natural gas per day. Now that the price of oil has reached $90 per barrel, this is a great opportunity for us. At today's prices, it was producing $366,000 per month in oil and gas revenue, so we moved in a rig yesterday to begin the project."

In addition, the Texaco Nickerson 21 is the only well that has been drilled and completed in the Hackberry Frio 2 sand in the southeast fault block of the Gillis-English Bayou field. Available geological and geophysical information indicates the reservoir may have re-pressurized, which may allow for higher production rates than Texaco and Sun Oil's rates.

Chestnut Petroleum acquired the Texaco Nickerson 21 well as part of its purchase of Texaco and Sun Oil's leasehold in the Gillis-English Bayou area, Calcasieu Parish, Louisiana.