Santos and Esenjay Make Major Gas Discovery in Texas
Esenjay Exploration, Inc. has completed and tested its Runnells #7 well in the deep geopressured Frio Trend in Matagorda County, Texas. The Runnells #7 well is the second delineation well drilled in the Runnells Field, a December 2000 discovery in the Company's Duncan Slough 3-D Seismic Project. The Runnells #7 was production tested at an unstimulated daily flow rate of 22 million cubic feet (MMCF) of natural gas and over 500 barrels of condensate from the Claughton interval of the Lower Frio formation, with flowing tubing pressure of 6,235 pounds per square inch through a 25/64" choke. Currently, the Runnells #7 is shut in, and the Company expects to turn the well to sales by December 21, 2001.
The Runnells #7 is the second delineation well drilled in the Runnells Field and the third consecutive significant well drilled and completed in the Field. Once the Runnells #7 is turned to sales, Esenjay expects that total daily production from the three wells will be approximately 50 MMCF of natural gas and 1,500 barrels of condensate.
The Company anticipates that several additional delineation wells will be drilled in the Runnells Field. The next delineation well is scheduled to spud in the first quarter of 2002.
In November 2001, Esenjay sold a 23.45% working interest in the Runnells Field to Santos USA Corp. for $20.25 million in cash. Additionally, the Company was reimbursed for the Runnells #7 drilling costs attributable to the interests sold. Esenjay retains a 9.68% working interest in the existing Runnells production unit, which contains approximately 700 acres. Esenjay also retains a 10.57% working interest in an additional 1,400 acres covering this structure. The Company expects to record a gain on this sale of more than $12 million in the fourth quarter of 2001.
Esenjay has a total of five contiguous 3-D seismic surveys, most of which is proprietary, covering 170 square miles in Matagorda County, Texas. The Company currently controls approximately 17,000 acres in Matagorda County and has more than 20 3-D seismic confirmed prospects in the area, many of which have high potential in the same targeted deep geopressured Frio sands found in the Runnells discovery. Esenjay is the generator and operator of these prospects and has working interests ranging from 40% to 64%.
Esenjay's partners in the Runnells Field discovery are Santos USA Corp. with a 63% working interest, and Samedan Oil Corporation with a 24% working interest. The remaining interest is owned by private parties.