Abraxas Looks Ahead to 'Active' 2011 Drilling Program

- Abraxas Looks Ahead to 'Active' 2011 Drilling Program

Tuesday, August 09, 2011
Abraxas Petroleum Corp.

Abraxas provided an operational update and issued production guidance for 2011.

Rocky Mountain – North Dakota / Montana

In McKenzie County, North Dakota, Abraxas drilled the Stenehjem 27-34 1H to a total measured depth of 16,504 feet, including a 5,965 foot lateral in the middle Bakken formation, and completed the well with a 17-stage fracture stimulation. The well was placed on production in late June and in 44 days the well has produced (on a restricted choke) 20,000 barrels of oil, 32.2 MMcf of wellhead gas which yields 2,700 barrels of natural gas liquids and 23.3 MMcf of residue gas for a total of 26,500 barrels of oil equivalent, or an average of 600 barrels of oil equivalent per day. For the past three days, the well averaged 615 barrels of oil equivalent per day on a 21/64-inch choke with 750 psi of flowing pressure. Abraxas owns a 79% working interest in this well.

In various counties in North Dakota and Montana, fourteen non-operated horizontal wells, targeting the Bakken or Three Forks formation, in which Abraxas owns a working interest are currently in progress or recently placed on-line. Seven gross (0.35 net) wells went on production in June or July, three gross (0.08 net) wells have been fracture stimulated and are currently cleaning up, one gross (0.36 net) well is waiting on completion, one gross (0.01 net) well is currently drilling and two gross (0.05 net) wells are waiting on a drilling rig. Since January 2010, Abraxas has elected to participate in 19 gross (1.00 net) non-operated wells in the Bakken / Three Forks play.

In McKenzie County, North Dakota, two gross (0.11 net) non-operated horizontal wells targeting the Mission Canyon have been drilled, completed and are currently waiting on production facilities. Early production testing of these wells has yielded flow rates in excess of 1,000 barrels of oil per day each.

In early July, Abraxas announced the purchase of a drilling rig that is in the process of being refurbished. After completion, the rig will be mobilized to McKenzie County, North Dakota and it is anticipated that the rig will begin drilling on the first pad site in October.

Rocky Mountain - Wyoming

In Campbell and Niobrara Counties, Wyoming, a two well oil development program is scheduled to begin this fall. One of these horizontal wells will target the Niobrara formation and one will target the Turner formation. Abraxas owns a 100% working interest in each of these wells.

South Texas – Eagle Ford

Abraxas currently owns a 41% equity interest in Blue Eagle, a joint venture between Abraxas and Rock Oil Company, LLC. On June 29, 2011, Rock Oil contributed an additional $11 million to the joint venture and Blue Eagle purchased approximately 2,487 net acres in McMullen County, Texas in the oil window of the play.

In DeWitt County, Texas, Blue Eagle's first well, the T-Bird 1H, continues to outperform expectations and is currently producing 930 barrels of oil equivalent per day, which is comprised of 185 barrels of condensate, 300 barrels of natural gas liquids and 2.7 MMcf of residue gas. The well has produced approximately 230,000 barrels of oil equivalent during its first 180 days on production. Blue Eagle owns a 100% working interest in this well.

In DeWitt County, Texas, Blue Eagle participated in a non-operated horizontal well with its 43.9% working interest. The Matejek Gas Unit 1 was drilled to a total measured depth of 17,865 feet, including a 3,600 foot lateral, and completed with a 14-stage fracture stimulation. The well is currently shut-in waiting on pipeline hookup which is expected to be completed later this month.

In Atascosa County, Texas, the Grass Farms 1H is currently drilling the lateral at a total measured depth of 13,150 feet towards a total measured depth of 13,380 feet, including a 6,000 foot lateral. A fracture stimulation date has been secured for this well in September, a month later than originally anticipated. Blue Eagle owns a 100% working interest in this well.

West Texas

In Nolan County, Texas, the Spires 126 2H was drilled to a total measured depth of 9,000 feet, including a 2,000 foot lateral, and completed open hole and un-stimulated. The well was recently placed on-line and during the first 20 days of production, the well averaged 125 barrels of oil equivalent per day, which was comprised of 47 barrels of oil, 46 barrels of natural gas liquids and 210 Mcf of residue gas. Abraxas owns a 100% working interest in this well.

In Coke County, Texas, the Sadie #2A was drilled to a total vertical depth of 6,425 feet and is waiting on completion and the Sadie #1B is currently drilling below 4,600 feet towards a total vertical depth of 6,500 feet. These two delineation wells are targeting the Canyon Sands. Abraxas owns a 100% working interest in these wells.

In Reeves County, Texas, Abraxas previously announced that it acquired an additional 640 net acres, for a total of approximately 3,000 net acres, in the emerging Wolfbone play. Two wells directly adjacent to our acreage are currently being drilled by the industry.

Canada - Pekisko

In Alberta, Canada, the Twining 6-11 was drilled to a total measured depth of 8,900 feet, including a 3,025 foot lateral, and is waiting on completion and the Twining 6-12 recently reached total measured depth of 9,150 feet, including a 3,380 foot lateral. These two wells are targeting the Pekisko formation. Canadian Abraxas owns a 100% working interest in each of these wells.

Guidance

For July, Abraxas produced approximately 4,160 barrels of oil equivalent per day up from an average of 3,845 barrels of oil equivalent per day for the second quarter. Abraxas expects production for 2011 to average 4,000 – 4,200 barrels of oil equivalent per day, including its equity interest share of Blue Eagle's production, which would generate an exit rate for 2011 between 4,700 and 4,900 barrels of oil equivalent per day.

Comments

"We've been busy! It is a refreshing change to get back to a very active drilling program. So far, we are quite pleased with the results of our operated (and non-operated) wells and we hope to continue this success throughout the year. The purchase of the drilling rig will enable us to be quite active in the Williston Basin on an operated basis and in an efficient manner for years to come," commented Bob Watson, Abraxas' President and CEO.

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Samson O&G Projects 'Active' Drilling Program in 2H11

- Samson O&G Projects 'Active' Drilling Program in 2H11

Monday, July 11, 2011
Samson O&G Ltd.

Samson O&G has recently acquired a substantial project which expands its position in the Bakken Formation. This Roosevelt Project, along with the appraisal of the Niobrara Formation in Wyoming, and three conventional plays in the Hawk Springs project area, means that Samson will have an active drilling schedule in the second half of 2011. The combined drilling program, and the estimated cost and timing of the wells, is set out in the following table. Samson will fund this program from its existing cash resources.

As a result, Samson currently projects that it will exit the end of the calendar year with an estimated cash balance of US $32 million. This estimated cash balance takes into account existing operating cash flows, projected general and administrative expenditures, land acquisition costs, current forecasts of commodity prices and the capital expenditures noted below. However, the forecast includes no cash flow from any of these new wells during the year.

Samson's drilling program is expected to deliver appraisal results in three key areas:

• The Hawk Springs Niobrara will be the first well to be drilled and fracture stimulated in the Niobrara 'B' zone.
• Multiple conventional targets in the Hawk Springs project are planned, where considerable potential is observed from the 3-D data at both the Permian and Pennsylvanian stratigraphic levels.
• The Roosevelt Project Bakken wells will be the first ever drilling in this area and will therefore will be key tests for this project.

Defender US 33 #2-29H – Hawk Springs Project - Wyoming

This well will be the first appraisal of the Niobrara 'B' zone and is the first well to be drilled and funded 100% by Halliburton under their farmin agreement. It will be fracture stimulated following the completion of a 4,300' horizontal.

Spirit of America US 34 #1-29 - Hawk Springs Project-Wyoming

This well will be drilled as an 11,000' vertical test down to the Precambrian basement to test multiple conventional targets in the Permian and Pennsylvanian sections.

State 24-63 #10-1H – Hawk Springs Project-Wyoming

This well will be drilled as an 11,447' measured depth horizontal well in the Codell Sandstone (which lies directly beneath the Niobrara Formation). Upon completion of the well in the Codell sandstone, the fracture stimulation job is expected to fracture the Niobrara Formation.

Australia II 12 KA 6– Roosevelt Project – Fort Peck Reservation, Montana

This well will be the first appraisal well in the Roosevelt Project and will be drilled as a 15,500' measured depth horizontal well in the middle member of the Bakken Formation.

Constellation US 20 State #1-36H – Hawk Springs Project-Wyoming

This well will be Samson's second Niobrara well and is located outside the Halliburton/Mountain Energy Joint Venture area. It will be fracture stimulated following the completion of a 4200' horizontal.

State 24-63 #14-1H – Hawk Springs Project- Wyoming

This well will be drilled as an 11,272' measured depth horizontal well in the Codell sandstone. Upon completion of the well in the Codell sandstone, the fracture stimulation job is expected to fracture the Niobrara Formation.

Diamondback #1 – Onshore Gulf Coast Basin, Texas

This 8,900' well will test an amplitude anomaly in the Oligocene Frio Formation on the flank of the Big Hill salt dome in Jefferson County, Texas.

Australia IV 12 KA– Roosevelt Project – Fort Peck Reservation, Montana

This well will be the second commitment well in the Roosevelt Project and will be drilled as a 15,200’ measured depth horizontal well in the middle member of the Bakken Formation.

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Schlumberger Launches Latest Additions to ACTive Family of CT Services

- Schlumberger Launches Latest Additions to ACTive Family of CT Services

Wednesday, June 15, 2011
Schlumberger Ltd.

Schlumberger announced the release of the latest additions to the ACTive family of coiled tubing (CT) services. The ACTive gamma ray (GR) and ACTive tension and compression (TC) make up a new downhole platform that allows operators to obtain a variety of downhole measurements to enable real-time decisions and operational control.

The new platform delivers downhole measurements specifically for internal and external pressure, temperature, casing-collar locator (CCL) depth correlation and optional gamma ray or tension and compression, all in real time. Premium pressure measurements and modularity enable increased confidence and overall job efficiency during CT interventions.

"The ACTive service allows operators to optimize stimulation design, reduce time on location and improve operational success. Additionally, raw reservoir properties are measured and downhole tool status can also be provided with the latest ACTive family additions," said Dominique Malard, president, Schlumberger Well Services. "This knowledge translates to the optimization of resources and increased production."

On-depth perforating and effective placement of packers is achieved through real-time depth correlation against the formation with a pump-through GR module. Wellbore and reservoir depth correlation can also be achieved with these latest ACTive family additions, as well as the industry's first pump-through, pressure compensated downhole tension and compression measurements. Depth accuracy for precision applications such as perforating and zonal isolation is given with the combination of the real-time collar location and GR measurements.

Saudi Aramco was looking for a solution to decrease water cut and revive oil production in a slanted openhole producer well that was drilled and completed in 2002. The ACTive in-well live performance service was selected, including the ACTive TC and ACTive GR, in combination with the CoilFLATE coiled tubing through-tubing packer, to isolate the production zone from the water source and create a precise cement placement. The well was successfully revived, with postjob production rising to 13,500 bbl/d of oil with just 10% water cut on a fully open choke.

The ACTive family of services provides live downhole measurements that are conveyed on a fiber-optic enabled CT. The system is made up of a bottomhole assembly, surface electronics and dynamic interpretation software. The ACTive family offers solutions for various applications such as matrix acidizing, wellbore cleanout, perforating, zonal isolation, lift operations and Distributed Temperature Survey profiling.

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Musings: Updated 2011 Hurricane Forecast Still Calls for Active Year

Musings: Updated 2011 Hurricane Forecast Still Calls for Active Year

Tuesday, April 12, 2011
Parks Paton Hoepfl & Brown
by G. Allen Brooks


The latest forecast update from Professors Philip Klotzbach and William Gray of the Department of Atmospheric Science at the Colorado State University (CSU) says the upcoming hurricane season is expected to see above-average activity. The April 6th forecast is slightly lower than their December 2010 forecast largely due to uncertainty about the sea surface temperatures in both the South Pacific and South Atlantic oceans that can assist or retard the development and strengthening of tropical storms.

The forecasting team has developed a new April methodology based on a data collected from 1982-2010. There are four predictors employed in the model with two of them based on sea surface temperatures in the Atlantic and Pacific oceans. The Pacific Ocean for most of the past year has been cooler than normal, which helped contribute to the Atlantic basin’s storm activity last year mostly turning north before reaching the U.S. In general, sea surface temperatures in the eastern and central tropical Pacific Ocean have been 0.50C-1.00C below average.

Exhibit 21.  Pacific Ocean Sea Surface Temperatures Low


Source:  Colorado State University

On the other side of the globe, Atlantic Ocean sea surface temperatures remain at or above average levels. They have cooled recently but most likely that has been caused by a shift from a negative phase for the North Atlantic Oscillation to a positive phase. Atmospheric conditions currently are conducive for an active hurricane season as wind shear, a force that can limit the development and strengthening of tropical storms, across the basin has been well below average over the past two months.

Exhibit 22.  Atlantic Ocean Temperatures Near Normal
   
Source:  Colorado State University

With these conditions, the CSU forecasting team began looking for analog years to help fine-tune their forecast. They were looking for years generally characterized by weak to moderate La Niña conditions and above-average tropical Atlantic and far North Atlantic sea surface temperatures during February and March. They found five seasons that met these conditions. Four of them had either neutral or La Niña conditions during the hurricane season and all four of them were very active years. Those four years were 1955, 1996, 1999 and 2008.

Exhibit 23.  Analog Years For Hurricane Forecast
   
Source:  Colorado State University, PPHB

The forecasters also found 2006, which had the same February-March conditions. That year, however, experienced an unexpected El Niño, which greatly reduced hurricane activity.

The CSU team anticipates 2011 to be slightly more active than what was experienced in the average of these five analog years due to the very active season predicted by their new statistical model. It is interesting that there were only two analog years that fit the parameters for both the December 2010 and April 2011 forecasts, and those years were 1999 and 2008.

Exhibit 24.  Latest Hurricane Forecast Down Slightly

Source:  Colorado State University, PPHB

The CSU forecast calls for a total of 16 named storms, down one from the December 2010 forecast total. It also expects there to be nine hurricanes and five major hurricanes. The total number of storm days will be down by five, from 85 to 80, with a similar reduction for each of the other storm categories.

In terms of landfall probabilities, the forecast calls for a 72% probability of a storm hitting the entire U.S. coastline compared to the 52% average for the past century. There is a 48% chance of a landing on the East Coast including the Florida peninsula compared to the historic 31% rate.  For the Gulf Coast from the Florida Panhandle to Brownsville, Texas, there is a 47% chance of a tropical storm landfall versus the historical average of 30%. Despite the higher probabilities, nature is such that it is impossible to forecast with any degree of accuracy until a storm is on its way whether it will reach land.  For the offshore energy industry, it will need to be on alert this hurricane season, although if the current pace of permitting continues, there won’t be too many offshore rigs to have to worry about this fall. Is that a backhanded positive?

Download the PDF Musings041211.pdf

Europa O&G Updates Ops

Europa O&G Updates Ops

Wednesday, March 30, 2011
Europa O&G plc

Europa O&G provided an update on several active projects.

Highlights

• UK Production tested oil from two zones in the new onshore West Firsby well
• WF-9
• Installation of jet pump is key to maximizing rates
• Well stimulation work being planned for Crosby Warren
• Romania Barchiz-1 sidetrack to deepen the well to the primary target
• France 3D reprocessing complete at Berenx, new 3D and engineering work planned

West Firsby

Two zonal pumping tests have been conducted on the new WF-9 well. As previously reported, the well encountered oil in two reservoir zones.

The lower of these, Zone 2, produced oil at rates of around 80bopd with strong associated gas but very little water. Heavy wax build-up in the well and the high gas rates are thought to have impaired flow through the beam pump.

Zone 1 produces much higher volumes of fluid, but with a high water cut. Net oil production from this zone under a beam pump regime is 40bopd. The beam pump, however, is only able to drawdown the well some 300psi, indicating that there is significant production upside with a properly configured pump. It should be possible with a jet pump to produce drawdown in the region of 1,500psi or more and the main constraint will be fluid handling capacity. The recent successful re-completion of WF-3 as a water disposal well is key tool in managing this issue long term.

A jet pump system has been sourced and will be commissioned to undertake further tests on both zones. Following the results of these new tests, a longer term zonal production strategy will be decided.

The workover of WF-7, which required a new bottom hole assembly, is due to commence this week and it is hoped the well will be back onstream within the next 2 weeks. Once WF-7 is back onstream, it is expected that Group production should be approximately 300bopd with further upside expected following installation of the jet pump on WF-9 and well stimulation work at Crosby Warren.

Crosby Warren

Engineering studies are complete on the question of undertaking a new hydraulic frac stimulation of the CW-1 reservoir. The study has shown that the historical frac has become ineffective over time. Consequently, a repeat frac stimulation presents an opportunity to significantly increase field production. The original frac was highly successful and led to a 15 fold increase in production rate. It is hoped that this work can be carried out in the next 2-4 months.

Discussions are ongoing with regard to the acquisition of a new 3D seismic survey jointly with neighboring license holders later this year which would lead to a much more robust subsurface model for both the Crosby Warren field and the Company's nearby Wressle exploration prospect.

Barchiz

Barchiz-1, drilled late last year, recovered oil on DST from a shallow sandstone reservoir with approximately 35 feet of net pay. The main exploration target of the well was not reached due to technical constraints. Following partner meetings last week, Europa has declared an intention to deepen the Barchiz-1 well to the primary objective as a sole-risk operation, subject to financing. The Operator proposed acquiring further seismic data along trend from Barchiz to identify a new exploration well location in the play. However, the Directors' view is that this an opportunity to test whether the Oligocene reservoir is present beneath the current well TD, a concept supported by nearby well control.

The joint venture group has applied for a license extension in order to pursue the remaining undrilled prospectivity on the license and the associated work program is currently being agreed with the authorities. Barchiz-1 sidetrack is expected to be drilled in the second half of 2011.

Berenx

Planning the appraisal of this potentially multi-TCF gas project has taken a step forward with the completion of 3D seismic reprocessing by CGG, which has greatly improved the seismic image. NRG, the Aberdeen-based well engineering company, have been retained to undertake detailed well engineering for the planned Berenx-3 appraisal well.

In the meantime and following the success of the CGG work, further 3D seismic data is planned for later this year. This survey, which could be acquired in Q4 2011, will quantify the western extent of the Berenx structure, which tested dry gas in the 1970's.

Acquiring this survey will fulfil the work commitment of the first phase of the permit and allow for automatic renewal in early 2012.

General

It should be noted that achieving optimum rates on the new West Firsby well will take some weeks and that, in conjunction with the earlier drilling delays this will generate full year (to July 31, 2011) projected revenue and profits below market expectations.

The Company is actively engaged in new venture activity, including current and near-term licensing rounds in its core area of NW and Continental Europe. The aim is to add significant high impact exploration acreage into the asset portfolio for drilling in 2012 onwards.

Paul Barrett, Managing Director, said, "There has been significant progress in a number of value-enhancing projects and we look forward to a sustained newsflow from seismic, drilling and new venture activity through the coming 12 months. Production growth over the coming months is expected to support this activity."