LNG Energy's US Subsidiary Hits Paydirt in Woodford Shale
LNG Energy announced that BWB Exploration LLC ("BWB"), LNG's US subsidiary, participated in a successful exploration well targeting the Woodford shale in the Ardmore Basin of Oklahoma in May 2009. Most details of the test are being held confidential but the operator was a major US independent oil and gas producer and horizontal ("HZ") drilling was employed to drill the test. BWB has a substantial leasehold position in the area totaling over 2,950 net acres in 12 different sections totaling 7,680 gross acres. The Company holds a 7.9% working interest and 6.419% net revenue interest in this new producing well.
The objective Woodford shale was encountered at approximately 11,500 feet and had a thickness of over 300 net feet. The HZ lateral in the Woodford was over 5,000 feet in length and after casing was run the well was hydraulically fractured in multiple stages. Initial production exceeded 3 mmcf/day, with 300 bopd and associated natural gas liquids, at a surface flowing pressure in excess of 1,000 psi. The Woodford Shale is a resource play with an estimated 200-300 BCF/section in-place. Well productivity has exceeded original projections since being brought into commercial production.
As a consequence, BWB has completed all legal regulatory submissions to the Oklahoma Corporate Commission to become the recognized operator to drill the offsetting two sections to the south. These two sections, where BWB has a 77.8% and 50.1% working interest respectively, are part of a contiguous 12 section block that BWB believes contains the Woodford Shale with similar geological properties as those experienced in the original non-operated HZ well. At present, geophysical and drilling studies are being performed to compliment a detailed economic analysis that would support the drilling of the first of two to four HZ Woodford Shale wells by BWB in these two sections. A preliminary internal reservoir engineering analysis suggests effective shale resource drainage requires four to eight HZ wells per section. This area of the Ardmore Basin has existing oil & gas gathering infrastructure that is capable of transporting and processing all anticipated gas and liquid production for sale. Pending a successful technical & economic assessment, spudding of the first HZ well in this initial program, is anticipated within the 1 year timeframe mandated by the Oklahoma Corporate Commission approval process. Full scale development could incorporate all existing acreage, with BWB as operator.
"We are extremely excited by the initial results of our 1st HZ Woodford Shale producer." commented Dave Afseth, President of LNG. "The production of oil, and gas with concurrent natural gas liquids, has a significant positive implication for our offsetting acreage and we are advancing our internal capital program as a result."