Southern Energy Corp (TSX-V:SOU, AIM:SOUC, OTC:MAXMD) has released successful early flowback results from the first well of the three-well horizontal pad site located in the Gwinville field.
The company highlighted well GH 19-3 No. 2, which is flowing at an initial level of 7.7 million cubic feet per day (MMcf/d), or 1,280 barrels of oil equivalent per day (boe/d), at a highly restricted flowing pressure, exceeding the company's modelled type curve.
Additional volumes from GH 19-3 No. 2 have increased the company's production approximately 60% to 3,175 boe/d, materially increasing gas sales as no test volumes are flared. As the company remains largely unhedged, the gas from GH 19-3 No. 2 is being sold at current NYMEX gas prices.
"This is a transformational moment for our company; not only are we adding material production, reserves and cash flow at a time when gas prices are near 14-year highs, but we are solidifying and executing our operational strategy to deliver multiyear redevelopment from our assets and highlighting the significant opportunity and optionality we have in providing equity growth for shareholders,” Southern Energy president and CEO Ian Atkinson said in a statement.
READ: Southern Energy announces higher petroleum and natural gas sales in 1Q from improved commodity prices
Initial results indicate that flowback performance using the Generation 3 completion design is far superior to any previous Selma Chalk wells in the area, Southern Energy noted.
The company’s Generation 3 completion design increased the stage count by over 275% and the proppant concentration by over 40% as compared with the most recent Selma Chalk horizontal wells completed in Mississippi between 2013 to 2015, and initial flowback performance suggests that the increased completion intensity is having a very positive result, it said.
"We are extremely excited by these initial results from our Generation 3 completion design on these Gwinville Selma Chalk horizontal wells. The flowback results from the GH 19-3 No. 2 well are evidence of how our team has successfully used modern technology to revitalize these significantly underdeveloped conventional assets in the Gulf Coast area,” said Atkinson.
"While still premature to make accurate type curve predictions for these and future Gwinville wells, we can say at this point, that the early flowback performance is far superior to any of the previous Selma Chalk wells in the area. Our operations team has done an excellent job of safely managing the stimulations on the three-well pad, and we expect costs to come in line with AFE estimates," he added.
Flowback results are expected from two recently completed Gwinville wells shortly. The GH 19-3 No. 2 well was opened to flowback following the stimulation operation.
After approximately one week of clean-up, the well is flowing at 7.7 MMcf/d at a highly restricted flowing pressure of 1,100 psig. Production from the well is flowing directly to sales creating significant additional cash flow for the company, Southern Energy said.
The well continues to produce over 2,000 barrels per day (bbl/d) of load fluid, with approximately 24% recovered to date. Throughout the first week of production, as more load fluid is recovered, the well's gas rate has consistently increased day over day.
Share issues
Southern Energy also announced that, as of June 7, 2022, 5.3 million warrants issued on April 22, 2021, representing approximately 31% of outstanding 2021 warrants, have been exercised for total proceeds of $1.7 million to the company.
There are 11.8 million remaining 2021 warrants outstanding that expire on April 30, 2023, for total proceeds of $3.8 million to the company.
In addition, as of June 7, 2022, there have been 2,923 conversions of the outstanding 8% convertible unsecured subordinated debentures issued on June 14, 2019, and January 15, 2021, for 3.6 million new common shares, representing approximately 35% of the 8,389 convertible debentures issued.
Southern Energy is a natural gas exploration and production company whose primary focus is on acquiring and developing conventional natural gas and light oil resources in the southeast Gulf states of Mississippi, Louisiana and east Texas.
Contact the author at jon.hopkins@proactiveinvestors.com