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Permex Petroleum successfully re-completes shut-in wells, lifts production

Last updated: 15:00 28 Aug 2018 BST, First published: 10:00 28 Aug 2018 BST

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Permex Petroleum wants to build output through low risk, low cost well re-completions.

US-focused junior Permex Petroleum Corp (CSE:OIL) updated investors on operations, saying it had successfully re-entered and completed two shut-in wells, which will add to production.

Both were successful and the Stonewall County, Texas wells came online at an initial rate of 10 barrels of oil per day (bopd), but have now have stabilized at five barrels per day, the company said.

"Management believes the production rates from these mature, long-life wells to continue with less than 5% decline year on year (YOY)," said Permex in a regulatory statement.

"The remaining 35 shut-in wells that the company plans to re-enter have potential to yield an additional 175 net barrels in added daily production increasing the company's total daily production to 385 gross barrels of oil equivalent per day (boepd), solely by re-entering shut-in wells."

Enhanced oil recovery work

As well as the re-entry and stimulation of the two-initial shut-in w

ells, management started its Waterflood EOR (enhanced oil recovery) work on its Pittcock property in Texas in July this year.

The initial signs of success were realized through the pressurization of the reservoir, followed by an increased communication between the injectors and receiving wells.

The waterflood has begun increasing the field's production by a rate of 20%, said Permex.

Management expects to continue increasing the production through added injection while targeting to reach 200 barrels of oil per day (bopd) from the field, it noted.

Permex will now move on to the next shut-in wells as well as activating the next waterflood EOR which falls under phase one of Permex's developmental plans.

"The results obtained through the initial two well test program are in line with our strategy to add sustainable marginal production through low risk, low cost recompletions," said Mehran Ehsan, the president and chief executive of Permex.

Methodical approach

"Our plan has always been to take a methodical approach to our operations. As such bringing online the 35 additional shut-in wells even at the low production rate per well, is a strong position to take when combined with waterfloods, vertical drilling and horizontal programs."

Ehsan added that with oil prices at US$55 per barrel for WTI (West Texas Intermediate), these two re-entered wells have a pay-out of less than six months, which made them "quite economic".

"We will continue to execute on our reactivation, drilling and EOR programs; we feel these will lead to creation of significant value through increased reserves, production and of course cashflow. We are setting realistic operational goals and are meeting our targets."

Permex shares were unchanged at C$0.375 in Toronto.