RAM Energy 2nd Quarter Operational Update
RAM Energy Resources, Inc. updates its operating activity that occurred during the second quarter of 2007.
RAM has an interest in Barnett Shale leases covering 27,700 gross (6,800 net) acres in Jack and Wise Counties, Texas with all the acreage held by production. Including the recently completed Ashe C 1H and the T. L. Dickenson 1-H, RAM owns an interest in 11 gross producing gas wells in the Barnett Shale. The first of the Barnett Shale wells proposed by RAM to EOG Resources this year was the Ashe C 1H. Recently the EOG-operated Ashe C 1H well was completed and tested at an initial gross daily production rate of 2.55 MMcfe (0.38 MMcfe net). Similarly the first Devon-operated well of the current year to be drilled on jointly held Barnett Shale acreage, the T. L. Dickenson 1-H, was also recently completed and flowed at an initial gross daily rate of 4.30 MMcfe (1.23 MMcfe net). The initial production rates posted by these two wells represent the best initial production rates tested by the company in any of their Barnett Shale wells to date. Both wells are continuing to recover frac fluids with the Ashe C 1H currently producing at a gross daily rate of 1.1 MMcfe (0.16 MMcfe net) and the T.L. Dickenson 1-H currently producing at a gross daily rate of 2.78 MMcfe (0.80 MMcfe net).
During the quarter, RAM proposed its fifth well this year to EOG and other working interest owners that jointly own interests with RAM in the company's North Texas Barnett Shale acreage and EOG recently elected to drill and operate the well. The Dethloff #1H proposed to be drilled to a true vertical depth of approximately 7,000 feet with a lateral length of approximately 2,800 feet to test the Lower Barnett Shale formation. The proposed well is located in Wise County, Texas, within the prolific Fort Worth Basin. Total estimated costs to drill and complete the well are $3.2 million. If all parties elect to participate in the drilling of the Dethloff #1H, RAM will own a 24 percent working interest in the well and will bear a like percentage of the costs. RAM has made four previous well proposals to date this year; in each case EOG has elected to participate, drill and operate the proposed wells.
In addition to the growing number of producing wells, RAM's project inventory for potential near-to-intermediate term growth in its Barnett Shale play remains substantial and includes five PUD drilling locations, 19 probable seismic locations and eight possible seismic locations for a total of 32 drilling locations identified. Many of these locations stem from the company's acquisition and ongoing seismic review of 35 square miles of 3-D seismic data over the last year. In addition, RAM plans to acquire 50-60 square-miles of additional 3-D seismic during 2007.
In response to the apparent growth in activity, in April RAM increased its allocated capital spending for drilling and developmental activity on its Barnett Shale acreage to $10.0 million, or approximately 28 percent of its $36.3 million non-acquisition capital expenditure budget for 2007. Including $18.5 million paid for the recent acquisition of 120 wells located in Southeast New Mexico and West Texas, RAM's total capital expenditure budget for the year is $54.8 million.
Testing of Arkoma Basin Wells Continues to be Encouraging
Based on the successful completion of the Chesapeake-operated Weyerhaeuser #5-22 and #6-22 wells as producers in the Arkoma Basin, during the fourth quarter of 2006 and first quarter 2007 respectively, the company elected to participate in the Weyerhaeuser #8-22 well, which was spud in the first quarter and completed in the second quarter, and the Weyerhaeuser #10-22 well, which was spud and completed in the second quarter. These exploratory offset wells were drilled to aid in defining the limits of the Jack Fork sands, which are characterized by geologically complex faulting in this area. Each of the Weyerhaeuser #8-22 and #10-22 wells tested at a stabilized gross daily rate in excess of 3.5 MMcf (0.3 MMcf net). Current gross daily production from the four wells totals approximately 9.7 MMcf (0.8 MMcf net). In addition, RAM has participated in the Weyerhauser #9-22 well, which has been drilled to total depth and is waiting on completion. RAM has a working interest of 11.7 percent in the wells drilled to date and a higher working interest in surrounding blocks yet to be evaluated.
The company is also pursuing a potential exploratory drilling play in the Mid-Continent area of Oklahoma. RAM, as operator, recently drilled a well targeting the Redfork formation. The well was testing at the end of the period.
RAM's Wolfcamp Shale Activity Update
In RAM's 15,000-acre Wolfcamp shale play in West Texas, activity is continuing on the two vertical test wells drilled in the fourth quarter of 2006. Earlier in the year, two of the three zones thought to be potentially productive were fracture stimulated in one of the wells. In early June, the third zone was also fracture stimulated; the well is currently testing. In the other well, testing of the first zone produced a small rate of gas; the drilling results are currently under review. Both wells continue to recover frac fluid. The company does not anticipate that it will be able to predict whether such completion activities will result in commercially productive wells until additional testing occurs. Nevertheless, RAM has exercised its option to lease 9,835 net acres in the play and plans to drill another test well during the second half of 2007.
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