Mart Resources, Inc. and its co-venturers, Midwestern Oil and Gas Company Plc. (Operator of the Umusadege field) (Midwestern) and Suntrust Oil Company Limited (Suntrust), are pleased to report final testing results of the UMU-7 well located in the Umusadege field, onshore Nigeria and that the UMU-7 well has been placed on production. Mart and its co-venturers also report that export and pipeline capacity has been increased for the Umusadege field.
Following the completion of the UMU-7 well, flow tests were conducted on the four target sands, being the XIIc, XIV, X and XVIa sands. The UMU-7 well flowed at a stabilized combined cumulative rate of 10,373 barrels of oil per day (bopd) from the four sands tested on choke sizes ranging between 20/64 to 36/64 inches with API gravity ranging from 39 to 47 degrees. As previously announced, the first test flowed at a stabilized rate of 2,459 bopd from the XIIc sand on a 40/64-inch choke through 2 7/8 inch tubing.
The XIV sand, a 42-foot oil zone, flowed at a stabilized rate of 2,590 bopd of 44 API gravity oil through 3 1/2 inch tubing on a 24/64-inch choke at a flowing tubing pressure of 680 psi. Basic sediment and water (BS&W) was 4% and the gas/oil ratio was approximately 77 standard cubic feet per barrel.
The X sand, a 10-foot oil zone, flowed at a stabilized rate of 4,084 bopd of 39 API gravity oil through 2 7/8 inch tubing on a 36/64-inch choke at a flowing tubing pressure of 300 psi. BS&A was 0.5% and the gas/oil ratio was approximately 32 standard cubic feet per barrel.
The XVIa sand, a 10-foot oil zone, flowed at a rate of 1,240 bopd of 47 API gravity oil through 3 1/2 inch tubing on a 20/64-inch choke at a flowing tubing pressure of 235 psi. BS&A was 75% and the gas/oil ratio was approximately 14 standard cubic feet per barrel. The XVIa water production was mainly completion fluid due to significant losses into the formation caused by operational delays during the running of the tubing, completion and wellhead equipment. Additional testing is scheduled to be done on the XVIa zone once drilling of the UMU-8 well is completed and the drilling rig has been moved off the drilling pad.
The UMU-7 well has been completed using a dual-tubing string configuration with the XVI (a) and XIV sands completed in the 3 1?2 inch tubing string and the XII(c) and X sands completed in the 2 7?8 inch tubing string. As a result of the completion technology used, although the four sands that have been completed can be opened and closed at any time to allow for optimized production, it is only feasible to produce one sand per tubing string due to different pressures within the formations.
Following the completion of testing, the UMU-7 well was placed on long-term production on May 2, 2011 from the X and XIV sands at an aggregate initial rate of 3,352 bopd. This production rate is not necessarily indicative of future production levels as work is still ongoing to stabilize and optimize long term production rates from the well.
Increase in Export and Pipeline Capacity
Mart, Midwestern and SunTrust are pleased to announce that the third party pipeline and export facility owners have confirmed an increase in the export and production capacity from the Umusadege field commencing the first week of May 2011. The increase in production capacity will be shared amongst the existing three-member production group currently delivering to the third party pipelines from several fields, which include the Umusadege field. Under the existing agreements, pipeline capacity may be apportioned among the production group and therefore may be subject to periodic adjustment.
Existing pipeline capacity combined with the additional capacity allocated to the Umusadege field is expected to accommodate production from the existing UMU-1, UMU-5 and UMU-6 wells, production from two sands in the UMU-7 well and the UMU-8 well, if successful. Discussions are ongoing with the third party pipeline owners for further production capacity increases to accommodate production from additional development wells in the Umusadege field. Mart and its co-venturers are also increasing the capacity of the production facilities to 30,000 bopd at the Umusadege field in order to accommodate additional volumes from development drilling.
In addition to this increase in existing pipeline capacity, the Corporation and its co-venturers are evaluating new pipeline and export options to provide increased production capacity and to provide another independent export route for Umusadege field production.
The Umusadege field is currently producing at a rate of 11,237 bopd which includes 3,352 bopd from the UMU-7 well.
Production averaged 7,551 bopd in the first quarter of 2011 (“Q111”) from the Umusadege field. During Q111, the Umusadege field was shut down due to maintenance and modification of production facilities, ongoing adjustments to UMU-6 well production methodology, tie-in of the UMU-7 well for production testing and disruptions of the export pipeline for a total of 17.7 days or approximately 20% of Q111. For internal purposes, Mart budgets 15 days of shut-in time per quarter, though the Company has no control over the amount of shut-in time that will actually occur.