Otto Energy Completes Lightning Field Commissioning

THE BOWSER: Otto Energy (ASX: OEL) reported that production from the company’s Green #1 well on the Lightning field in Matagorda County Texas, USA has reached a steady production state as final facilities commissioning has been completed.

Otto Energy has a 37.5 per cent working interest (28.5% Net Revenue Interest) in the leases covering this field.

The company said it has put the Green #1 well through a series of tests to determine deliverability and that it is currently being operated on a 13/64th of an inch choke setting.

The well is delivering approximately 10 million standard cubic feet per day (MMscf/day) with more than 280 barrels per day (bbls/day) of associated condensate.

Otto indicated that final commissioning of the gas plant and associated facilities at the Lightning development have now been completed and production has reached a steady state.

The hot tap into the sales pipeline was completed in May and the well was opened to the sales line.

The company expects the Lightning well will contribute towards revenue through the commissioning months in May and June 2019 with the first full month of contribution to occur in July 2019.

Field Development Field evaluation will be ongoing with flowing material balance being used over the coming months to determine well deliverability and the overall reservoir size to optimize future development wells.

At this stage, the joint venture is planning for a second well to be drilled in January 2020 or earlier dependent upon the results of this analysis.

Further wells will likely be required to fully develop the very large size of the Lightning field.

“The Lightning field development represents the first in what Otto anticipates will be a strong pipeline of new development opportunities to come out of the current busy exploration drilling campaign that has been underway since mid-2018,” Otto Energy managing director Matthew Allen said in the company’s announcement to the Australian Securities Exchange.

“Diversifying Otto’s production base and delivering upon our strategic goal of 5,000 barrels of oil equivalent per day by the end of 2020 has been a key focus for Otto over the past three years since entering the USA and making our first discovery at South Marsh Island 71.

“Otto is very pleased to be making significant progress towards the achievement of this goal.

“Otto would like to congratulate the field operator and all the team involved at Hilcorp Energy on the successful commissioning of the Lighting facilities and achieving a steady production state.

“The development of deep, geo-pressured gas/condensate fields requires the skills and experience of an operator of Hilcorp’s calibre.

“Otto looks forward to working with Hilcorp to further the Lightning development in coming months with the drilling of additional wells being planned in the early stages of the field life to optimise ultimate recoveries.”





Empire Energy Group Sells Kansas Assets

THE BOWSER: Empire Energy Group (ASX: EEG) announced it has reached a deal with Mai Oil Operations, Inc for the sale of the company’s Kansas assets for US$19.1 million.

Empire Energy Group said the sale proceeds will principally be used to retire debt to a maximum remaining gross debt balance of US$8 million, while retaining a proportion from the sale proceeds for working capital and continued investment in Empire’s core Northern Territory shale assets.

The company expects the sale will enable it to retain cash flow positive production from its New York State and Pennsylvania gas production assets and the substantial upside potential of its Marcellus Shale and Utica Shale rights in New York State.

The sale is expected to complete in Q3 2019.

“The sale of the Kansas assets represents a key milestone in the execution of Empire’s strategy to build value for shareholders through the reduction of debt and the continued focus on exploration and development in the McArthur and Beetaloo Basins,” Empire Energy Group chief executive officer Alex Underwood said in the company’s announcement to the Australian Securities Exchange.

“Over the last year management and the Board have concentrated their efforts on the active repair of Empire’s balance sheet to favourably position the company for growth in the McArthur and Beetaloo Basins.

“The execution of a recapitalisation and debt reduction program, as well as the Kansas asset sale has enabled us to substantially reduce debt and increase our working capital position ahead of the exploration and development program in the Northern Territory.”




Strike Energy Provides Jaws Operation Update

THE BOWSER: Strike Energy is progressing work at the Jaws-1 project wells, located at the Southern Cooper Basin Gas Project (SCBGP) Joint Venture (Strike Operator and 66.67 per cent, Energy World Corporation 33.33 per cent).

Strike Energy said it has continued carefully drawing the wells down towards desorption and the flowing bottom hole pressure has now reached 250psi.

Sustained gas production has continued and is slowly building as further water is removed and more coal around the wellbore is depressurised.

The company is now setting pump rates to maintain the 250psi pressure in the wellbore and allow the desorption front to gradually propagate outwards into the reservoir.

Current water rates of 450 barrels per day show continuing strong reservoir productivity, with a natural decline in water anticipated over time as more coal transitions from water to gas production.





Winchester Energy Continues Development of Mustang Prospect

THE BOWSER: Winchester Energy (ASX: WEL) has formulated a development plan to accelerate oil production from the Strawn Fry Sand member of the Mustang prospect in the Permian Basin of Texas, USA.

Winchester Energy is developing the plan following its recent success with White Hat 20#3 that has initial production of 306 barrels of oil per day (bopd).

Winchester has commissioned independent U.S. based petroleum consultants, Mire & Associates, Inc. to conduct an optimization study and update of the Gross Prospective Resources of the Strawn Sand Fry member within the Mustang prospect.

The company has completed development optimisation studies that identified a further nine well locations within the central Mustang area followed by up to a possible further 25 wells across Mustang North and South (total of 34 wells) subject to ongoing development drilling success.

Recent observations documenting modest associated gas flow from White Hat 20#3 have led Winchester to commence work to connect the well to gas sales.

The gross prospective gas resource converted to barrels of oil equivalent (boe) has also been factored into a revised Gross Prospective Resource estimate.

Incorporating new data from White Hat 20#3, the Mustang Prospect Prospective Resource target best estimate has a P50 of 2.03 million barrels of oil equivalent (mmboe) recoverable and a high estimate P10 of 3.77mmboe from the Strawn Fry Sand member.

The original oil in place in the Fry Strawn Sand member has increased to a best estimate P50 of 10.8 million barrels of oil in place and a high estimate P10 of 16.9 million barrels of oil.

Winchester indicated a new well, White Hat 20#4, is on schedule to spud in July that is anticipated to be followed by White Hat 20#5 (permitting underway) which will be spudded shortly thereafter.




Strike Energy Continues Drilling at West Erregulla-2

THE BOWSER: Strike Energy (ASX: STX) provided an update on drilling of the company’s West Erregulla-2 oil target.

Strike Energy is drilling West Erregulla-2 in EP 469, which is adjacent to and targeting analogous Permian gas sands of a similar size and nature as the Waitsia gas discovery.

The company plans to frill to a total depth of 5,200 metres and penetrate a further two independent reservoir targets.

These include a conventional gas target in the Basal Wagina sandstones and the primary gas sand sequence in the Kingia High Cliff.

Strike Energy has continued to drill the first intermediate section with the hole currently nearing section TD.

The company said its rate of progress has improved over this section during the under-reaming and the well remains on schedule and within budget.

During the latter part of drilling this section Strike passed through the tertiary Cattamarra oil target.

The company said that although hydrocarbon shows and elevated mud gas readings (including all heavy hydrocarbon components) were evident at the prognosed depth, it considered these were insufficient to warrant the running of advanced wireline logging and testing.

The company said the hydrocarbon shows are supportive of the Cattamarra geological model in this low POS target, and will strongly assist in calibrating the amplitude response to both hydrocarbons and good quality reservoir for future Cattamarra activities.

Looking ahead, Strike will complete drilling the hole section towards the nominal 2,550m TD or when suitable 11-3/4” casing setting formation is intercepted allowing casing to be run into hole and cemented in place at section TD.

Strike will begin drilling a second 10-5/8” intermediate section to a nominal 4,230m.

The Basal Wagina, a secondary conventional gas prospect, will also be intercepted in the next section.

Strike Energy is the operator and the holder of a 50 per cent Joint Venture interest in EP469, and Warrego Energy (ASX: WGO) the holder of the other 50 percent JV interest.