Pryme Energy Limited (Pryme) is pleased to provide an operational update on its Capitola Oil Project located alongthe Eastern Shelf of the Permian Basin, Texas USA. Current daily production is approximately 140 barrels of oil (105 barrels of oil net to Pryme) and 200 Mcf of natural gas (150 Mcf of natural gas net to Pryme)fromthe first 3 Capitola wells.
Production from these wells is expected to increase as the McCain
well cleans up and continuous production is established from the Hope Boleswell.
The short term plansare to optimise production from producing wells;to fracture stimulate and complete our fourth well, the Shari Lynn No.1, which was drilled in February; and
to drill and complete our fifth.
The Shari Lynn well is relatively close to the Mahaffey Bishop well and, when connected to pump and cleaned up, is expected to have similar production characteristics. The
Mahaffey Bishop well is presentlyaveraging 90 barrels of oil per daywithno decline.
Concurrently with the developmentof the fourthand fifth Capitola wells an evaluation of project reserves will be undertaken. The reserve report willclassify reserves from 1P, 2P through to 3P and provide further evidence ofthe value of the Capitola Oil Project.
The results of the study are expected to be included in Pryme’s June 2015 Half Year Report.
“Our focus through the first half of 2015 will be on successfully bringing all Capitola wells into production and optimizing their performancebefore planning thedrilling program for the second half of the year,” said Justin Pettett, Pryme’s Managing Director and CEO.
“Average lifting cost forour three producing wells is currently about US$10 per net barrel produced, we expect to further reduce costs through electrifyingthe pumping units on the Mahaffey Bishop and the McCain wells in the coming weeks.
We are also very conscious of our current low commodity price environment and any drilling program for the remainder of 2015 will be executedwith this in mind aswell as conserving cash.”
Below is a summary of the status of each well currently being operated by Prymein the Capitola Oil Project. Mahaffey Bishop PU1 (100% WI / 75% NRI before payout (75% WI and 56.25% NRI after payout)) The Mahaffey Bishop PU1 well in the Sweetwater acreage block was drilled to 6,090 feet (1,856 metres)
intersecting 34 net feet (10 net metres) of oil and gas saturated sandstone within the A sand of the Canyon Sand formation and encounteringadditional hydrocarbon shows in the Cline Shale and other intervals.
The Initial Potential (IP) of the well was recorded as 85 barrels of oil per day (63 barrels net to Pryme); it is currently exceeding expectations and has averaged 90 barrels of oil per day production (68 barrels of oil per day net to Pryme) over the past 30 days with no decline in its production profile.
The well is producing from the Canyon Sand series;the Cline Shale formationhas been isolated due to excessive water production. “With the well showing no production decline to date, we believe that our frack design and implementation are proving to be very effective in this part of the field,” said Ryan Messer,Pryme’s COO and
Executive Director.
Hope Boles PU1 (100% WI / 75% NRI before payout (75% WI and 56.25% NRI after payout)) The second well to be drilled in the Capitola Oil Project, the Hope Boles PU 1 in the Sweetwater acreage block, reached a depth of 6,050 feet (1,844 metres). Mud log data, collected while drilling, and electric logs indicate that our primary objective, the multiple sand packages within the Canyon Sand formation, contains 94 gross and 36 net feet (11 net metres) of oil and gassaturated sandstone. Performance to date from the Hope Boles has been intermittent with oilproduction having reached approximately 50 barrels ofoil per day and then fluctuating at around 10-20 barrels of oil per day (8-15 barrels per day net to Pryme). Production and operabilityof the well were alsoaffected by the unseasonably cold weather which persisted through January and February. Actions
to improve the performance of the well have includeddrilling out the plug,which was installed to isolate the Cline Shale from the Canyon Sands, to allow oil and gas from both zones to be produced to surface.
McCain 189-F1 (100% WI / 75% NRI before payout (75% WI and 56.25% NRI after payout)) The McCain 189-F1, which is located in the Claytonville acreage block, reached a depth of 7,300 feet (2,225 metres).
Mud log data, collected while drilling, and electric logs identified several intervals of oil and gas saturated sandstoneaggregating approximately 170 net feet (51 net metres) in the Canyon Sand series. Other intervals with hydrocarbon showswere encountered in the Cline Shale, the Palo Pinto and the Ellenburger formations which were also targets for this well.
The well was fracture stimulated and completed in several Canyon Sand, Palo Pinto, Lower Canyon Sand and theCline Shale intervals andis currently producing at 45barrels of oil per day (33barrels net to Pryme)plus natural gas and its associated liquids.
We expect this production rate to increase as the well continues to clean up post its fracture stimulation. Agas sales line has been laid and sales of natural gas and associated liquids have commenced. This additional revenue stream is enhanced by the high liquids content of the natural gas from the McCainwell. We are currently selling 200
Mcf per day of natural gas(150Mcf per day net to Pryme) with a BTU rating of approximately1,700Btu/scf(standard BTU rating is 1,000Btu/scf) and achieving
a substantial premiumover present natural gas prices.
Shari Lynn No.1 (100% WI / 75% NRI)The Shari Lynn No.1 well, located in the Sweetwater acreage block of the Capitola Oil Project, was drilled to adepthof 5,621 feet (1,713 metres)in February. Mud log data collected while drilling identified several intervals with oil and gas shows withinthe Breckenridge Lime and Canyon Sand intervals. A cased-hole log has been run to tie in the mud log data and to better identify the depthsof the multiple Canyon Sands for completion. Fracture stimulation,completion and installation of production facilities are planned to be carried out in the coming weeks. Fox 7-L4 (100% WI / 75% NRI)The Fox 7-L4 well willbe drilled within the Sweetwater acreage block of the Capitola Oil Project and will target the Canyon Sand formation.
Drilling will commence once the Shari Lynn is brought into production and oil and natural gas sales have commenced.
Upon drilling of the Fox 7-L4 wellPryme will have earned a 45% WI (4,200net acres) in the Shallow Rights and a 30% WI (2,800net acres) in the Deep Rightsthroughout the Capitola Oil Project acreage. Due to the current market conditions, including the price of oil, Pryme has elected to limit its earned interest in Capitola to 45% in the Shallow Rights and 30% in the Deep Rights.
