DNR Secretary Spotlights 3rd Possible Shale Play in La.

- DNR Secretary Spotlights 3rd Possible Shale Play in La.

Wednesday, August 31, 2011
Louisiana Department of Natural Resources

Louisiana Department of Natural Resources (DNR) Secretary Scott Angelle said Wednesday that the energy exploration industry has begun work on developing yet another new oil and natural gas shale play in Louisiana – giving the state one proven and producing shale formation and two that are being watched closely as the early stages of activity begin.

The potential new interest area, spanning portions of North Louisiana and southern Arkansas, is referred to as the "Brown Dense" or the "Lower Smackover," and is believed to be a layer of limestone at the base of the Smackover Formation – which itself is a well-known formation that has long been a source for traditionally produced oil and natural gas in North Louisiana.

The "Brown Dense" joins the Tuscaloosa Marine Shale as the second half of Louisiana's duo of dense rock plays believed to have the kind of production potential that has made shale plays such as Louisiana's Haynesville and the Barnett and Eagle Ford Shales of Texas the new normal in energy exploration. The Tuscaloosa Marine Shale is believed to underlie much of Central Louisiana, with potential productive areas currently being explored from Vernon Parish to East Feliciana Parish.

The energy industry is watching the development of the Tuscaloosa Marine Shale and the Brown Dense closely, as both are believed to have the potential to contain oil reserves, in addition to natural gas. New processes and technology have led to rapid gains in domestic oil and natural gas reserves, making them recoverable from ultra-dense formations once thought uneconomical to produce.

"We in Louisiana have a long and distinguished history of providing the energy that fuels this nation, and I am bullish on the future of energy production in this state and the role it will play in providing jobs and economic strength," Angelle said. "We are seeing that exploration companies and investors share that optimism and belief in Louisiana's natural resources as they seek new domestic reserves of oil and natural gas. The development of the Haynesville Shale natural gas play, the top-producing natural gas play in the nation, has helped give them that confidence."

Initial development of the Brown Dense formation, generally believed to underlie northern Claiborne, Union and Morehouse parishes in North Louisiana, has barely begun – with Southwestern Energy having begun the process of drilling its first well in Arkansas and having announced that it will seek a permit to begin drilling for a Brown Dense well in Claiborne Parish before the end of 2011.

Southwestern Energy has also announced that it has invested $150 million in leasing mineral rights for 460,000 acres to develop the play. Southwestern Energy recently applied to the Louisiana Office of Conservation for approval of an area of the Lower Smackover formation in Claiborne Parish near the Arkansas border as a designated unit for drilling.

Devon Energy has also announced that is has secured 40,000 acres in mineral leases for the Brown Dense and that the company intends to drill a test well for the play. Devon has already received a permit for a well targeting the deeper section of the Smackover in Morehouse Parish.

Devon is also active in the Tuscaloosa Marine Shale, where the company has secured 250,000 acres of mineral leases and is in the process of drilling two wells in the shale. About half a dozen wells targeting the Tuscaloosa Marine Shale – long thought to contain substantial reserves, but considered uneconomical to reach through previous methods – are currently in the process of permitting or drilling.

"New exploration methods have changed the game for development of energy prospects in Louisiana and the nation, as we saw firsthand with the incredible upswing investment and economic activity in North Louisiana in 2008," said Angelle. "This is yet another opportunity for Louisiana to show that we can be an inviting and exciting province to do the business of finding and providing new sources of domestic energy that provide economic strength and opportunity for our state and our nation."

"With that exploration of the denser formations will come the need for water for hydraulic fracturing," said state Conservation Commissioner Jim Welsh.

Welsh said that companies drilling for the Brown Dense formation have informed the Office of Conservation they intend to use surface water and recycled water for their overall project needs, in conformance with guidelines and advisories issued in nearby areas experiencing stressed ground water conditions.

The anticipated Brown Dense area of development in Louisiana underlies the Sparta Aquifer, which is currently experiencing improved water levels after combined state and local efforts to manage ground water use in the area.

"We are still discouraging new high-volume users from using ground water in that area, and giving guidance on alternative sources for water," Welsh said.

Oil & Gas Post

Promote Your Page Too
LINK

Contango Spotlights Year-End Results

- Contango Spotlights Year-End Results

Monday, August 29, 2011
Contango O&G Corp.

Contango reported natural gas and oil sales from continuing operations for the fiscal year ended June 30, 2011 of approximately $203.8 million, compared to $159.0 million for the same period last year. The Company reported net income attributable to common stock for the year ended June 30, 2011 of approximately $65.0 million, or $4.15 per basic share and $4.14 per diluted share, which included approximately $1.6 million of income from discontinued operations, or $0.10 per basic and diluted share, related to the sale of our Conterra Company assets and the distribution of Contango ORE, Inc. This compares to net income attributable to common stock for the year ended June 30, 2010 of approximately $49.7 million, or $3.14 per basic and $3.08 per diluted share, which included a loss from discontinued operations of approximately $0.5 million, or $(0.03) per basic and diluted share.

For the three months ended June 30, 2011, natural gas and oil sales from continuing operations were approximately $48.9 million, up from $40.1 million for the three months ended June 30, 2010. Contango had net income attributable to common stock of approximately $17.5 million, or $1.12 per basic and diluted share, compared to net income attributable to common stock for the three months ended June 30, 2010 of approximately $15.4 million, or $0.97 per basic and $0.95 per diluted share.

For the remainder of fiscal year 2012, our capital expenditure budget calls for us to invest approximately $81.4 million. Of this, we expect to invest approximately $50 million to drill two wildcat exploration wells in the Gulf of Mexico, at an estimated dry hole cost of approximately $25 million each, net to Contango, subject to permitting approval by the Bureau of Ocean Energy Management, Regulation and Enforcement. We also plan to invest approximately $19.6 million in Alta Energy Partners, LLC, and $11.8 million to complete payment on several capital projects.

Our production is currently 78.1 million cubic feet equivalent per day, net to Contango. As of August 29, 2011, we had no debt and approximately $120 million in net available cash.

Oil & Gas Post

Promote Your Page Too
LINK

Beach Spotlights Discoveries in Egyptian Abu Sennan Concession

- Beach Spotlights Discoveries in Egyptian Abu Sennan Concession

Wednesday, August 24, 2011
Beach Energy Ltd.

Beach announced discoveries from its two wells in the Egyptian Abu Sennan concession, with production testing on both wells continuing to assess volumes and commerciality. It is expected that there will be an expeditious tie-in of the wells due to the location of the wells being within 10 kilometers of existing pipeline infrastructure. Details regarding the outcomes of the flow testing from the wells will be advised in due course.

GPZZ-4 was drilled as the first well of a six-well program in the Abu Sennan concession. During initial drilling, hydrocarbon shows were found in the lower and upper Bahariya Formations, and the Abu Roash "G" Member. An extensive testing program of these formations is currently underway.

The second well, Al Ahmadi-1, has also encountered hydrocarbon shows within the Kharita Formation, the lower Bahariya Formation, the Abu Roash "G" Member and the Abu Roash "E" Member. Hydrocarbon zones highlighted by the wireline logging and testing will be followed up with a significant cased hole testing program.

Beach Managing Director, Mr Reg Nelson said, "This is a fantastic result for Beach's International operations and is a credit to the team that identified the potential of this permit in Egypt's Western Desert. We have mentioned on a number of occasions that in order to grow reserves and production, one has to look beyond its own shores, hence why we strategically identified and invested in countries such as Egypt. These discoveries at Abu Sennan justify this strategy and we firmly believe that there will be further success in the not too distant future."

The Joint Venture equity interests in Abu Sennan are:

• Beach (via wholly owned subsidiary Beach Petroleum (Egypt) Limited) - 22%
• Kuwait Energy - 50% and Operator
• Dover Petroleum - 28%

Oil & Gas Post

Promote Your Page Too
LINK

Caza Spotlights Operational, Financial Results for 2Q11

- Caza Spotlights Operational, Financial Results for 2Q11

Monday, August 15, 2011
Caza O&G Inc.

Caza O&G provided its unaudited financial and operational results for the six months ended June 30, 2011.

Second Quarter Financial Highlights

• Caza's production increased 32% to 18,130 Boe for the three-month period ended June 30, 2011, from 13,712 Boe for the comparative period in 2010. This represents an average daily production rate increase of 48 Boe/d for the three month period ended June 30, 2011, 199 Boe/d as compared to 151 Boe/d for the comparative period. As anticipated, Q2 2011 production was slightly lower than Q1 2011 (which was 23,974 Boe) due to standard production curve declines in certain wells. Recently drilled wells that are in various stages of completion are expected to more than make up for the decline (see "Second Quarter Operational Highlights" below).
• Caza had a cash balance of $24,533,451 as of June 30, 2011, as compared to $9,375,345 at June 30, 2010 and $33,885,900 at December 31, 2010. The increase is attributable to the placing announced on Nov 15 2010. Caza's working capital balance at June 30, 2011, was $20,870,708 as compared to $26,612,514 at March 31, 2011. The decrease in Caza's working capital balance primarily represents the investments made to drill the O.B. Ranch #2 development well in Wharton County, Texas, the Caza Elkins 3401 & 3402 wells in Midland County, Texas, and the Caza 158 #3 in Upton County, Texas.
• Revenues from oil and gas sales increased 112% to $843,836 for the three-month period ended June 30, 2011, up from $398,883 for the comparative period in 2010. The increase in revenues was primarily due to the additional wells brought on since the comparative period. The average combined price received by Caza increased 60% to $46.54 per Boe during the three-month period ended June 30, 2011, from $29.09 per Boe during the comparative period in 2010.
• General and Administrative expenses were $1,435,156 ($1,403,088 net of reimbursements) for the three-month period ended June 30, 2011, as compared to $1,188,962 ($1,078,739 net of reimbursements) for the comparative period in 2010. The change in General and Administrative costs are a result of additional costs incurred and changes in reporting requirements as a result of converting to the International Financial Reporting Standards. During the three month period ended June 30, 2010, the Company received reimbursements that resulted from certain joint venture agreements that provided reductions in overhead costs that expired April 8, 2010.

Second Quarter Operational Highlights

• Drilling commenced on the O.B. Ranch #2 development well in Wharton County, Texas in May 2011. The well reached its target depth of 13,210 feet in June 2011, and electric logs were obtained through the target depth indicating potential pay in the Frio and targeted Cook Mountain formations. The well was fracture stimulated at the end of July 2011, and is currently being flowed back in order to clean up the fracture fluids. The well has been placed on an extended well test, and the market will be updated once stabilized flow rates have been achieved.
• The Caza Elkins 3401 well in Midland County, Texas, reached a total depth of 11,854 feet in June 2011. The rig was immediately moved to the Caza Elkins 3402 location, which reached a total depth of 11,852 feet in July 2011. Log data from both wells indicated multiple potential pay sands for both oil and gas in the Spraberry, Wolfcamp, Strawn, Atoka and Mississippian/Devonian formations. The fracture stimulation program for the Caza Elkins 3401 well began on July 28, 2011. The fracture stimulation program for the Caza Elkins 3402 well began earlier than anticipated on August 12, 2011. Both wells are currently being flowed back in order to clean up the fracture fluids. Caza will update the market once initial flow rates have been established for each well.
• The Caza 158 #3 well on the Windham property reached its target depth of 9,824 feet in June 2011, and Caza elected to participate in the operator's proposal to complete the well. The well has been fracture stimulated across all potentially productive intervals seen on the logs, which include the Spraberry/Wolfcamp, Penn and Strawn formations. The Caza 158 #3 was the fourth well drilled and completed on this property. The Caza 158 #1, 158 #2 and 162 #1 wells are currently at various stages in their respective fracture stimulation programs, but are all producing oil and natural gas.

W. Michael Ford, Chief Executive Officer commented, "I am very pleased with the progress that we have made in 2011, both operationally and from a financial perspective. In the three months to June 30, 2011, Caza has continued to progress a busy work program, which should add further production, reserves and cash flow to the solid platform that we have created through our endeavors to date.

"Revenues have materially risen due to increased oil and gas production levels and a supportive price environment. As we add production through our exploration and development campaign, the Company and the shareholders should continue to benefit.

"I look forward to updating the market on future exploration activities and established flow rates associated with wells that are currently in various stages of completion operations."

Oil & Gas Post

Promote Your Page Too
LINK

LNG Energy Spotlights Initial Results of Core Analysis, Spudding in Poland

- LNG Energy Spotlights Initial Results of Core Analysis, Spudding in Poland

Friday, July 29, 2011
LNG Energy Ltd.

LNG Energy announced that its third vertical well, the Starogard S-1 well on the Starogard concession in Poland, was spudded on July 16, 2011. LNG has an indirect 20% interest in the well which is currently drilling at a depth of about 1,700 meters and has installed 690 meters of steel casing and cementing it from the bottom to the surface. This depth is below the potential fresh water intervals and was installed to isolate and protect the aquifers. A second string of steel casing will be installed and cemented at an approximate depth of 2,050 meters, prior to drilling ahead to the estimated core point. At the core point, the plan is to core the balance of the well for further analysis of the formations.

LNG has also received an initial portion of the core analysis back from the 3rd party contractors for both the Wytowno S-1 and Lebork S-1 wells, on the adjacent Slawno and Slupsk concessions. The data for the Lebork S-1 well is only from the sidewalls taken in the lower portion of the Ordovician and the Alum shale, as the whole core analysis from above these intervals is not yet completed. The additional core analysis data for the target intervals in the Lebork S-1 well, and the final core analysis reports for both wells are expected to be in by the end of August at which time the log analyses for both wells will be reprocessed with the core data.

• Porosities:
  • Lebork S-1 well: 47 meter thick Ordovician/Cambrian interval has an average porosity of 4.0% and
  • Wytowno S-1 well: 91 meter thick Lower Silurian target interval has porosity ranges of 1.1% to 4%, averaging 3.0% and the 40 meter thick shallower Lower Silurian interval has a porosity of 5.6%.
• Gas filled porosity:
  • Lebork S-1 well: gas filled porosity ranges from 0.8% to 3.9%, averaging 1.8% of bulk volume in the Ordovician/Cambrian and
  • Wytowno S-1 well: the Silurian targets range from 0.3% to 1.6%, averaging 1.1% of bulk volume, with one shallower Silurian interval that has a value of 4.3% of bulk volume.
• Desorption:
  • Lebork S-1 well: average desorption values of 40 Standard Cubic feet of gas per ton of rock, ("SCF/ton") over the Lower Silurian and 268 SCF/ton over the 47 meter Ordovician/Cambrian interval. The Lower Ordovician/Cambrian shale had intervals as high as 451 SCF/ton.
  • Wytowno S-1 well: average desorption values of 124 SCF/ton in the Lower Silurian target interval and 77 SCF/ton in the shallower Lower Silurian interval. For comparative purposes BNK Petroleum Inc.'s Oklahoma Woodford Shale Tishomingo field has average values of 104 SCF/ton.
• Thermal maturity:
  • Wytowno S-1 well: thermal maturity values were estimated from the reflectance of pyrobitumen and the Thermal Alteration Index (TAI) obtained from Palynological (micro-paleo) analysis of the drill cuttings, which both equate to a Ro of 1.8 in the Lower Silurian.
  • Lebork S-1 well: TAI for the cuttings from the Lower Silurian to Ordovician/Cambrian are also equivalent to a Ro of 1.8, which places the thermal maturity for both wells in the dry gas window.
• TOC:
  • Wytowno S-1 well: the total organic carbons ("TOCs") are variable across the Lower Silurian target interval, ranging from 0.1 to 1.3 TOC by percent weight. The TOC data from the Lebork S-1 well is not yet available, however both the log calculated values and SEM image analysis values indicate multiple times higher TOCs across the Ordovician/Cambrian shales.

Incorporating the micro-paleo and high-resolution stratigraphic analysis into the geological model indicates that the Wytowno S-1 well was drilled on a localized paleo-topographic high. What was originally interpreted as Ordovician/Cambrian shales are actually Lower Silurian hot shale intervals. The intervals in the Lebork S-1 well have also been revised on the basis of the micro-paleo and high-resolution stratigraphic analysis, resulting in slightly different thicknesses of the various intervals. In addition to the seismic program, a depth to crystalline basement study will be conducted. The study will cover a large portion of northeast Poland, fully encompassing all three concessions. The interpretation of this study will provide better understanding of general basin geometry, identify sub basins and locate significant basement related faulting. The study is slated for completion in September 2011.

Completion activity for the Lebork S-1 and Wytowno S-1 wells are scheduled to begin in the fourth quarter. The possibility of undertaking the completion of the Starogard S-1 well in conjunction with our two other wells is also under review, with well results and equipment availability to determine the timing. Best North American industry practices are being utilized for drilling and testing the wells, including utilizing bladders to hold the fresh water for fracture stimulating the well, the arrival of these are determining the start of the completion activity. The bladders ensure complete isolation from surface soil and water, reduce truck traffic to and from the site and increase safety. The flowback fluids are flowed directly into self-contained steel tanks on location.

Recently approval has been received from the Polish authorities to acquire approximately 407 km of 2D seismic on the concessions. The seismic program will further define basin structure and burial history as well as aid in individual well location selection. The term of the three Saponis concessions were also extended to provide Saponis enough time to acquire the seismic prior to drilling the second well on each concession. It is anticipated that the acquisition of this seismic will commence in the fourth quarter of this year.

"We are very encouraged by the initial results from the sidewall core tests on the Wytowno well," commented Dave Afseth, President and CEO of LNG. "The results of the core analyses as well as the analyses of the sidewall cores will enable us to design and implement an appropriate stimulation to flow test the wells later this year."

Oil & Gas Post

Promote Your Page Too