Delta Petroleum Underscores U.S. Operations for Q2
Delta Petroleum Corp. has issued an operational update on exploration and development in its U.S. assets for the second quarter.
Piceance Basin, CO, 31% - 100% WI
The Company continues to develop the Vega Area with four DHS drilling rigs. Current plans include an increase in the number of operating rigs to eight by the first quarter of 2009. Current net production from the Piceance Basin approximates 46.5 million cubic feet equivalents per day (Mmcfe/d). The Company has continued
to experience significant drilling cost reductions by decreasing the drilling time required for new wells from an average of 15 days in the first quarter of 2008 to an average of 13 days in the most recent quarter. Drilling results continue to support the Company's expectation that the total resource potential of the Company's approximate 24,000 net acres of leasehold in the Piceance Basin may exceed 2.4 trillion cubic feet of natural gas equivalents (Tcfe). Proved reserves are unaudited and estimated to approximate 515 Bcfe as of June 30, 2008.
In addition, Delta and its partners in the Collbran Valley Gas Gathering, LLC (CVGG) will participate in the construction of a 20-mile, 24-inch pipeline, with an ultimate capacity of 600 Mmcf/d. This pipeline will interconnect with a new 22-mile, 24-inch pipeline that will provide access to the Meeker processing facility. Initial deliveries are expected in the first quarter of 2009. CVGG will provide the Company with significant takeaway capacity for the development of its properties in the Vega Area.
Paradox Basin, UT, 70% WI - To date the Company has drilled six wells in the Greentown project area. The Company is in the process of drilling two wells, completing three wells, and has one producing well. During the
past five months, the Company has experimented with numerous drilling and completion procedures that have included artificial stimulation of various clastic zones in vertical wellbores and the drilling of six separate
horizontal laterals in three wellbores. The Company's activities were primarily focused on two geologic intervals, the "O" zone and Cane Creek.
The Company continues its completion activities at the recently drilled Greentown Federal 26-43D (83% WI), which included a 269' horizontal lateral section in the "O" zone. The well had excellent shows while drilling and
required mud weights exceeding 19 pounds, which is indicative of very high pressures. The wellbore has experienced numerous downhole mechanical complications but is expected to be completed and flow tested soon.
In addition, the Company has drilled a 2,049' horizontal lateral (with 871' of lateral in the "O" zone) in the Greentown State 36-24H (75% WI) and a 2,533' horizontal lateral (all in the "O" zone) in the Greentown State
31-36 (83% WI). The Company is preparing to "frac" these laterals in mid-August and expects initial sales by the end of the month.
Three of the wells - the Greentown Federal 26-43D, Greentown State 31-36 and Greentown State 36-24H - have been drilled horizontally in the Cane Creek member of the Paradox Formation, with laterals of 1,439', 2,725'
and 1,647', respectively. These wells exhibited oil and gas shows while drilling or testing, but did not provide any indication of fracturing and were not accompanied by the over pressuring seen in the "O" zone, where
pressure gradients approach 0.9 psi/foot. The shows indicate that hydrocarbons were present in the Cane Creek but that the lack of a bottom seal (salt) on the western edge of the project area, where most of the
wells have been drilled to date, caused an ineffective trap. The eastern side of the Greentown area would be at least five to six miles away from the Cane Creek subcrop and should allow for commercial accumulations
similar to the historic production in the Big Flats/Bartlett Flats area to the southeast, where wells along the western subcrop of the Cane Creek have been either non-productive or marginally productive. The larger Cane Creek wells in the Big Flats Field are located in excess of five miles to the east of the Cane Creek subcrop.
The Company is preparing to drill the Federal 11-24 with DHS rig #10. This well site is located approximately halfway between the Greentown State 36-11 and the Greentown State 32-42 discovery wells. Simultaneously, the Company is expected to commence drilling the Greentown Federal 33-12, which is located one-half mile east of the Greentown State 32-42 discovery well, with DHS rig #1.
Management believes that the drilling and production results to date confirm that the "O" interval of the Greentown project area is a commercial oil and natural gas bearing zone that is prospective over the majority of
the Company's acreage position. Management also believes that the Cane Creek is a potentially commercial zone that is prospective over approximately half of the Company's acreage position.
Columbia River Basin, WA, 100% WI
The Company is drilling the Gray 31-23 well (Bronco Prospect) in Klickitat County, Washington. On July 25, 2008 the well experienced a fire on DHS rig #7 that injured four workers. It is suspected that a pocket of natural gas encountered while drilling ignited on the rig floor. Although the fire caused some damage to the rig, it has been repaired and is expected to recommence drilling within the next few days. Although a natural gas accumulation within the basalt is generally a positive indication of the existence of a natural gas source, it does not necessarily translate into the presence of economic natural gas
zones beneath the basalt. The Company still expects to reach total depth early this fall.
Central Utah Hingeline Project, UT, 65% WI
The Company has received a permit and is building a location for the Beaver Federal 21-14 in Beaver County, Utah. DHS rig #11 should arrive on location in mid-August, and the
well should spud immediately thereafter. This prospect is a large seismically defined structural feature located approximately midway between the Covenant oil field to the north and the Company's Parowan prospect
(Federal 23-44 well) to the south.
The Company has also received approval to commence completion activities on the Federal 23-44 in the Parowan prospect. The Company plans to begin testing various formations beginning the week of August 11, 2008.
Midway Loop Area, SE Gulf Coast, TX, ~ 10% - 55% WI
During the second quarter, the Company completed the Baxter A-141, which had an initial production rate of 15.3 Mmcf/d and 1,100 Bo/d. The Company is currently
drilling the Carter A-144, which is expected to reach total depth within the next two months. The Midway Loop project wells and acreage are currently held for sale.
The Company continues to develop and pursue opportunities on its properties in the DJ Basin, Wind River Basin and southeast Texas areas.