JV with Slawson to Begin Paying Off for GeoResources
In North Dakota, GeoResources continues to gain exposure in the Bakken Shale play in Mountrail County near the Parshall Field in its joint venture with Slawson Exploration Company. The first joint venture well in this project area is expected to commence drilling by the end of the first quarter of 2008. Thereafter, it is anticipated that Slawson will continuously utilize the drilling rig on project wells into 2009, drilling jointly held acreage in the project area. The Company owns varying working interests ranging from 10% to 15% in approximately 26,000 acres.
Additionally, the Company received final regulatory approval effective November 1, 2007 for its Starbuck Madison Unit secondary recovery project, located in Bottineau County. Phase 1 of the waterflood implementation is almost complete, and the Company started injection in the south half of the field in January, 2008. It is anticipated that two additional injection wells, along with associated facilities will be completed in February, 2008. Starbuck Field has produced 1.35 MMBO of the total estimated 2.05 MMBO primary reserves to date, with preliminary Company waterflood reserve estimates indicating the potential for an additional 1.6 MMBO of incremental secondary recovery with full field development on unit lands. The Company owns a 91.3% working interest.
On or before March 1, 2008, the Company expects to commence operations on the first of two horizontal development wells in Wayne Field, the Ballantyne/Steinhaus State H2 and the Oscar Fossum H5. The Company owns a 100% working interest and a 67.5% working interest, respectively, in the two wells. Other horizontal wells in the area have reported initial production rates in excess of 200 BOPD and ultimate recoveries in excess of 300 MBO. The Company estimates total drilling and completion costs of $1.4 million per well.
In Texas, GeoResources and its affiliated institutional drilling partnership ("Partnership") continue to successfully exploit its Austin Chalk properties with the first dual lateral horizontal well drilled on its acreage, the W. Richards Unit #1H, producing over 1 BCF in the 60 days since completion in early December 2007. The Company recently completed the Keisler Unit #1H which averaged 18.9 MMCFPD over the first 6 days of production. Drilling continues, on expanding acreage positions, with the E. Richards #1H, which is currently drilling and is expected to be completed in March. The Company plans to spud an additional 5-6 wells in this area in 2008 and expects to retain the current drilling rig and crew and spud a new well approximately every 60 -75 days for the next two or three years. The Company is considering dedicating an additional drilling rig to the program to accelerate drilling. GeoResources operates the wells and holds a direct 7.2% working interest. In addition, the Company is the General Partner of the Partnership, which holds an 82.8% working interest. GeoResources' initial 2% General Partnership interest can increase to over 35%, pending limited partner payout, plus a specified rate of return.
The Company continues to develop and drill prospects in South Louisiana and has recently drilled the first two of potentially five exploration wells in the Raceland Field of LaFourche Parish, Louisiana. These shallow wells generally have objectives above 9,500 feet. The Company is contractually required to drill three of the wells and the remaining two wells are optional. These prospects and wells are operated by the Company and were generated by Southern Bay Energy LLC, currently a wholly owned subsidiary of the Company, prior to its merger with Geo Resources in April of 2007. At that time a majority of these prospects were promoted out to third parties for cash, an overriding royalty interest and incremental reversionary interest. Accordingly, the Company only has a direct 8.5% working interest. The first well, Davaine #1, was flow tested over a two day interval and averaged 145 BOPD and 50 MCFD over that period and has since been shut in to allow for completion of permanent production facilities. The second well has completion operations underway and is expected to have similar results.
- GeoResources Reports Increase in Production, Reserves (Jul 07)
- GeoResources Triples Production, Adds Acreage (Apr 12)
- GeoResources Appoints New Board Members (Apr 01)