28 May 2013 07:30
NORTHCOTE ENERGY LIMITED - Positive Frac UpdateNORTHCOTE ENERGY LIMITED - Positive Frac Update
PR Newswire
London, May 28
Northcote (AIM: NCT), an onshore US oil and gas exploration and productioncompany, is pleased to announce the initial positive results from itssuccessful fracture stimulation (`frac') of its Big Hill #1 well at the HorizonProject, Osage County, Oklahoma, in which Northcote has a 51.75% workinginterest (41% Net Revenue Interest) and an update on the testing of Big Hill #2.
Key Highlights
* Testing on the Big Hill #1 well, the first in the four to six well frac programme reported: + Open flow rate of up to 1,210 Mcf/day of natural gas (215.5 boepd gross, 88.4 net to Northcote) representing a 1,200% increase on the 3 month average production prior to stimulation + Average since completion of the frac of 16 barrels (gross) of oil per day, where previously the well had not been an oil producer, providing further encouragement that the fracture stimulation has enabled the well bore to open up unexploited reservoir + At open flow, inclusive of the oil production, the well has demonstrated the potential to produce up to 231.5 boepd (net to Northcote 95boepd) * The well has been producing on a limited choke and the gas production has averaged 204 (gross) Mcf/day since the frac. * Once the increased choke is applied and production has stabilised, the frac at Big Hill #1 can be expected to contribute significantly towards Northcote's 2013 100 boepd target * Testing at the Big Hill #2 has been suspended following the identification of a leak in the tubing - results previous to the discovery of the leak were positive. The operator is working to correct this and results will be available in due course. * Plans for fracture stimulation programme at two further producing wells is underwayNorthcote's Chief Executive Officer Randy Connally said, we are delighted bythe initial performance of the Big Hill #1 well which has the potential, oncethe choke is increased, to significantly increase production above the pre-fraclevels. The success of the Big Hill #1 represents a big step towards meetingour 100 boe/d 2013 target.
"The Big Hill #1 was internally ranked as our most gassy and worst performingwell of our nine Mississippian wells prior to stimulation. We believe thesuccess of this stimulation, with an open flow rate potential over 12 timeshigher than the pre-frac levels, is a positive indicator as we move tostimulate the remaining seven historically better performing wells in ourportfolio. We are also delighted that this well, which has historicallyproduced minimal oil volumes, is consistently producing good levels of oilalong with the higher natural gas production.
"We look forward to updating the market on the performance of Big Hill #2,where results were positive until we discovered a leak in the tubing earlierthis week, which is now being rectified. We are also continuing to plan thestimulation of two additional wells, to complete our initial four well fracprogramme and will announce expected timing as we get a firm date scheduled.Our technical team on this project deserve recognition and thanks for a jobwell done and I am looking forward to continued success on this programme."
About Horizon - Frac programme
Hydraulic fracturing techniques are being utilised on unfracked horizontalwells on the Horizon Project as part of the Company's strategy to significantlyincrease production to 100boe/d. The Company announced the completion of thefracture stimulation of the Big Hill #1 and the Big Hill #2 on 3 May 2013.
Following completion of the fracture stimulation programme the well has been onlimited production and is still recovering frac fluids along with formationwater. During this time the well produced oil at a flow rate of approximately16 barrels, with a production high of 40 barrels per day. Natural gas averaged204 Mcf/day through a 5/64 inch choke at 130% of its meter capability withcasing pressure of 175-200 psi.
Flow measurement services calculated that the open flow rate of the well was upto 1,210 Mcf of natural gas per day. Northcote therefore plans to increase thechoke size to maximise production a process which requires supervision of Osagerepresentatives and will occur in due course. Once the choke is increased weexpect this to permit increased sales rates and the resultant production willbe reported accordingly.
The Big Hill 2-H has a tubing leak and will have to be serviced prior tofurther testing, we do not expect the costs of this to affect the overallbudget for the well. Once operations at the Big Hill #2 have resumed we willannounce test results in due course.
The Company has plans underway for the fracture stimulation of the next twowells and further information will be provided on anticipated timings whenfinalised.
The Horizon Project in Osage County contains multiple potential pay zones foroil and liquids-rich natural gas. Northcote's current prospects in the HorizonProject include both horizontal and vertical opportunities. The Horizonproperty now totals over 1,800 net acres. Management continues to monitoropportunities to accelerate the development of the Horizon project and tosupplement it with additional opportunities in Osage and surrounding counties.
Glossary
* `boe' means barrels of oil equivalent: a unit of energy based on the approximate energy released by burning one barrel (42 US gallons or 158.9873 litres) of crude oil. There are 42 gallons (approximately 159 litres) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh). The value is necessarily approximate as various grades of oil have slightly different heating values. BOE is used by oil and gas companies in their financial statements as a way of combining oil and natural gas reserves and production into a single measure. * `boepd' means barrels of oil equivalent per day * `Mcf' means thousand cubic feet **ENDS** For further information visit www.northcoteenergy.com, see below or contact thefollowing: Randy Connally Northcote Energy Ltd +01 214 675 7579 Ross Warner Northcote Energy Ltd +44 7760 487 769 Dan Jorgensen Northcote Energy Ltd +44 20 7024 8391 Roland Cornish Beaumont Cornish Ltd +44 20 7628 3396 Jerry Keen Shore Capital Stockbrokers +44 20 7408 4090 Limited Bidhi Bhoma Shore Capital Stockbrokers +44 20 7408 4090 Limited Hugo de Salis St Brides Media and Finance +44 20 7236 1177 Ltd Elisabeth Cowell St Brides Media and Finance +44 20 7236 1177 Ltd About NorthcoteNorthcote Energy Ltd is a revenue generative US onshore oil and gas productioncompany focussed on the rapidly emerging Mississippi Lime formation inOklahoma. The Company participates with leading operators, including MidstatesPetroleum and Chesapeake Energy, in low risk development plays where advancedtechniques, such as horizontal drilling and fracing, are used to unlock knownoil accumulations and dramatically improve recovery rates. Management isfocused on increasing production through a multi-well drilling and fracingcampaign in 2013.
All of the technical information, including information in relation to reservesand resources that is contained in this announcement has been reviewedinternally by the Company's Technical Director, Mr. Kevin Green. Mr. KevinGreen is a Petroleum Geologist who is a suitably qualified person with over 30years' experience in assessing hydrocarbon reserves and has reviewed therelease and consents to the inclusion of the technical information.