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Texon Petroleum confirms sixth successfull well in Texas

Published: 13:41 30 Apr 2010 BST

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Texon Petroleum (ASX: TXN), an Australian-based oil and gas explorer and producer with its operations located in the Gulf Coast of Texas, has reported that its first “Olmos” well on Mosman-Rockingham has flowed at an initial rate of 111 boepd (comprising 100 bopd and 65 mcf of gas per day) through a 8/64” choke.

It has also reported that the sixth well on its Leighton Project, Tyler Ranch #5, has begun to flow oil and gas at the gross rate of 445 boepd from the Olmos reservoir (comprising 420 bopd and 150 mcf of gas per day) through a 8/64” choke.

MR#1 will now be connected for Olmos oil and gas production with first sales expected in the next few days. The time from well spud to revenue earning production will be about 50 days.

The numerous wells to the east of Mosman-Rockingham are Olmos producing wells in the AWP oil and gas field.

There are several other wells besides MR#1 on or in close proximity to Mosman-Rockingham where Olmos pay is indicated to be present from wireline electric logs (i.e. A, B, C, D, E). Wells A & B have respectively produced 147,000 and 137,000 boe, but wells C, D & E have not been produced.

These wells together with MR#1 indicate the likely presence of the Olmos reservoir in Mosman- Rockingham. Seismic data suggest that the Olmos is more likely to be present in the eastern half of the Mosman and the eastern and south-eastern parts of Rockingham.

On the basis that each Olmos well will drain 40 acres of the Olmos reservoir then there could be another 51 Olmos locations in Mosman-Rockingham, representing a potential of some 6.6 million boe as to Texon’s overall 96.6% Working Interest.

The Eagle Ford in MR#1 is the same thickness as at Tyler Ranch #4 (“TR#4”) with similar porosity, permeability, total organic carbon, and gas saturation. Like the Eagle Ford in TR#4, a high percentage of the Eagle Ford Shale in MR#1 is limestone suggesting that the rock should respond well to fracture stimulation.

Eagle Ford Shale potential in Texon's Mosman-Rockingham Project is estimated to be 35.6 million boe as to the company current average working interest of 96.6% in the Mosman-Rockingham leases.

The MR#1 results together with information from surrounding wells where the Olmos and Eagle Ford are present, are indicative of the likelihood of both reservoirs being present and productive of oil and gas at Mosman-Rockingham.

The combined Olmos and Eagle Ford overall resource potential in Mosman-Rockingham as to Texon’s current 96.6% Working Interest is some 42 million boe.

The company now plans to investigate the drilling of one or two more Mosman-Rockingham Olmos wells. One or both wells would be deepened to the Eagle Ford Shale to continue to add to the Texon's knowledge of the Eagle Ford in Mosman-Rockingham.

Also, Texon will investigate the feasibility of drilling a 96.6% WI Eagle Ford horizontal well in Mosman- Rockingham beginning the well by the end of this year.

Texon CEO Dave Mason said, “MR#1 is a positive result for the company. The Olmos flow from MR#1, together with evidence of the Olmos in the five other wells indicates that Mosman-Rockingham could be another Olmos project for the company."

"Texon’s Mosman-Rockingham Olmos potential could be twice the size of the company’s Olmos position at Leighton."

"The presence of the Eagle Ford Shale in MR#1 together with nearby Eagle Ford activity by other operators suggests that there is a high likelihood of Mosman-Rockingham also being an Eagle Ford Shale project with potential as to Texon’s current WI of 35 mmboe," he added.

"Combined, the Mosman-Rockingham Olmos and Eagle Ford Shale projects, together with the Olmos and Eagle Ford Shale in Leighton should provide a very sound growth platform for the company."

"At Texon’s current working interests (and excluding the company’s other gas producing wells and prospects), the Leighton and Mosman-Rockingham Olmos and Eagle Ford projects amount to 60 mmboe of resource potential to the company,” said Mason.

The combined production rate of the five existing Leighton wells (Peeler #1, Tyler Ranch #1, Tyler Ranch #2, Tyler Ranch #3 and Tyler Ranch # 4) at this time is a gross 460 boepd with Texon’s Working Interest share being 322 boepd.

Tyler Ranch #5 has been connected to oil tanks and a gas sales pipeline so that the company will now begin to obtain revenue from the production. The time from well spud to revenue earning production has been 22 days.

With six out six Leighton successes, the company is continuing with its plans to develop the Olmos reservoir in the Leighton oil and gas field.

Financing arrangements to drill up to 25 more wells are targeted to be finalized in the next few months.

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