Exploration & Production | Well Cost
Amarok Spins Bit at Two Wells in Wyoming; Talks Well Cost
Print
|
Amarok Energy Inc. has reported an operations update.
Operations Update
Amarok recently drilled 2 wells (1.0 net) and recompleted 1 well (0.5 net) in Wyoming.
The first well drilled was the Lake Creek 21 well. The total estimated cost of the well based on the AFEs from the operator is USD$1.23 million (USD$620,000 net). The well was on production as of January 20, 2014. Based on preliminary field estimates provided by the operator, the Lake Creek 21 well had initial production of approximately 50 bbls of oil per day and has produced at a rate of 39 bbls/d (19.0 net) of 27° API asphaltic sour crude at a 20% oil cut, over the first 20 days. The production is coming from the upper Tensleep Zones using a conventional pumping unit. The operator is reviewing the possibility of increasing production from the well through the activation of a lower Tensleep zone, as well as switching to an electric submersible pump.
The second well drilled was the Lake Creek 22A well. The total estimated cost of the well based on the AFEs from the operator is USD$1.66 million (USD$830,000 net), which also includes a side tracking operation. The recompletion operation was completed on the Zimmerman Butte 6 well. The total estimated cost of the operation based on the AFE from the operator is USD$354,500 (USD$177,250 net).
Completion reports for the Lake Creek 22A and the Zimmerman Butte 6 wells are being reviewed by Amarok at this time and the test results will be publicly released in the near future, once analyzed. The operator expects these wells to be on production in March 2014, subject to power being installed on location.
The total net production to the Corporation from its Wyoming assets averaged approximately 39 bbls/d in January 2014 and is currently approximately 45 bbls/d at a 1% level oil cut based on February 7, 2014 field estimates provided by the operator. The foregoing does not include any production from the Lake Creek 22A well and the Zimmerman Butte 6 well. The production levels are expected to vary significantly over the next few months as wells are shut in for testing and placing the new wells on full production.
The Corporation previously announced that it planned to drill a well in Montana, USA in early Q1 2014 whereby Amarok would earn a 50% working interest in approximately 37,000 gross acres (18,500 net). The Corporation determined not to commence drilling the well by the January 31, 2014 deadline. Based on further technical review and a significant increase in estimated well costs, it was determined not to negotiate a further extension of the agreement to earn an interest in the property.
Amarok estimates that its current cash balance, net of currently anticipated capital commitments, is approximately $15.5 million. To date approximately $4.3 million has been allocated to Wyoming through Amarok's previously announced asset acquisition and recent drilling and recompletion operations as well as $1.6 million on other projects including the foregoing Montana farmin opportunity, due diligence operations in Belize, and land leases acquired in Montana.