Crown Point Energy Inc. announced the completion of two more oil and gas development wells under a 14-well development, exploration and recompletion program at its Tierra del Fuego (TDF) concessions in Argentina. Crown Point, which has a 25.78% working interest in the TDF concessions, also provided an update on the exploration program on these concessions.
"The latest two development wells provide further evidence that we will be able to increase TDF production as our drilling program brings new volumes on stream," said Murray McCartney, CEO of Crown Point. "We expect that these two wells will supplement two wells that were brought on production during October. We hope to report results from more of our wells in the next few weeks."
The 14-well program is focused on the Las Violetas concession, one of Crown Point's three TDF concessions. The program consists of drilling eight new development wells and the fracking and recompletion of four existing wells in the Los Flamencos gas pool, plus two exploration wells, one near the San Luis gas plant and one on the Puesto Quince prospect. Crown Point's priority is to have as many of the newly drilled wells and the recompleted wells as possible tied in and on production during the fourth quarter of 2014.
Details on development well LFE-1002
One of the recently drilled development wells, LFE-1002, flowed gas during an eight hour production test at an average gross rate of 3.0 million cubic feet (mmcf) of gas per day and flowed liquids at an average gross rate of 213 barrels per day of oil (44 API) and 67 barrels per day of treatment fluid. Total gross production during the eight-hour test was 0.9 mmcf of gas and 95 barrels of liquids comprised of 75% oil and 25% treatment fluid at an average flowing pressure of 327 psi.
The test, which targeted the Springhill sand formation, was conducted through a separator on November 7, 2014. Work is underway to place the well on production before the end of November. Crown Point cautions that test results are not necessarily indicative of long-term performance of the well or of ultimate recovery of hydrocarbons from the well.
LFE-1002 was drilled to a final total depth of 2,280 metres, logged and cased with a 10 metre gross Springhill sand section. The well was completed and fracked with 92 tonnes of sand.
Details on development well LF-1027
Testing operations on the second recently drilled development well, LF-1027, are scheduled to begin today. Subject to the completion of testing operations, measured flow rates and pressures from this well are expected to be available within a few days.
LF-1027 was drilled to a final total depth of 2,242 metres. This well was logged and cased with a 16 metre gross Springhill sand section and was completed and fracked with 90 tonnes of sand. Well tie-in operations will commence immediately after production testing has been completed, with a target on-production date before the end of November.-
Update on exploration program
Drilling and logging operations on SL x-1003, the first of two exploration wells, were completed yesterday. The well was drilled to a depth of 2,207 metres and is being cased today as a potential Springhill gas well. Completion and testing will be carried out at the end of November. The well is located approximately 2.6 km from the San Luis Gas Plant and was drilled to evaluate the potential of the Springhill sandstones on a separate fault block adjacent to the San Luis Springhill gas pool.
The rig will now be moved to drill the second exploration well, which will evaluate the Springhill formation in the Puesto Quince Prospect. Results from this second exploration well should be available by December.
Realized Benefits Expected in the Fourth Quarter
Crown Point expects a positive impact on its TDF operating results starting in the fourth quarter of 2014 from the new production from this 14-well program, especially when combined with the effects of improving natural gas prices so far in the quarter compared with the fourth quarter of 2013.
As disclosed in October, two other wells have recently been placed on production: LF-1024, a development well, and LFa-1003, a newly recompleted well that had previously been suspended in 2012 due to low flow rates.
. LF-1024 was drilled to a total depth of 2,200 metres. This well was logged and cased with a 13.5 metre gross Springhill sand section and has been completed and fracked with 93 tonnes of sand. The well was tied in on October 7, 2014 and has recently been producing at approximately 3 mmcf of gas per day (gross).
. LFa-1003 has a 6.5 metre perforated Springhill sand section and was completed and fracked with 52 tonnes of sand. The well was placed back on production on October 1, 2014 and has recently been producing at approximately 0.9 mmcf of gas per day (gross).
Of the other three recompletions, all have been fracked and await post frack clean out operations, and Crown Point expects all to be completed prior to year-end.
Of the other five development wells, one (LF-1008) awaits testing after having been cased, completed and fracked as a potential Springhill gas well, and one (LF-1028) was cased as a potential Springhill gas well but due to borehole conditions could not be successfully cemented. This well remains suspended and may be re-entered at a later date for remedial work. Three other development wells remain to be drilled during the fourth quarter and early 2015.
The Company believes market conditions will continue to have a positive impact on oil and natural gas prices as there is not sufficient hydrocarbon production in Argentina to meet the demand for energy consumption in the country. The Company also expects to realize benefits from its approved participation in the New Gas Subsidy Program. This new hydrocarbon subsidy program provides an incentive for producers to effectively earn higher gas prices for increases in natural gas production above base production levels.
