Here is the release:
Turner Bayou Chalk Project Well Updates
Rabalais 35 No.1 (8.8% Working Interest / 6.6% NRI)
Anadarko Petroleum, operator of the Rabalais 35-1 well in the Turner Bayou Chalk project, has advised that the well will be shut in for approximately one month to allow pressure to build up and to facilitate evaluation of the well’s commercial potential at the end of that period. Although the production potential of the well remains uncertain, based on well performance to date it is our view that the well is unlikely to produce commercial quantities of oil and natural gas.
The Rabalais 35-1 well is located in the northernmost portion of Pryme’s leased acreage in the Turner Bayou Chalk project. Based on our interpretation of the well log calibrated seismic data, the Austin Chalk formation in this area exhibits lower fracture density than it does in Pryme’s core acreage in which the Deshotels 20H and 13H wells are located. The higher the fracture density the higher the productivity of the Austin Chalk formation.
“Whilst the Rabalais 35-1 well result may have defined the northern limit of the prospective portion of the Turner Bayou Austin Chalk project, we remain convinced of the attractive commercial potential of our acreage. Most of our acreage is located along the thin section of the Austin Chalk that is associated with the underlying Edwards Shelf margin. This geological setting is most likely to have the highest fracture intensity. Recent reprocessing of Pryme’s 3D seismic data over the area has reinforced this interpretation,” said Justin Pettett, Pryme’s Managing Director. “Extensive fracturing and oil and gas produced to surface during drilling were observed in both the Deshotels 20H and 13H wells. Had it not been for sub optimal completion techniques and mechanical issues during the completion of both of these wells, higher production rates would have been achieved. Third party engineering studies have confirmed this view.”
Pryme’s working interest in the Rabalais 35 No.1 well is 8.8% (NRI 6.6%) reflecting the small amount of acreage held by Pryme in the drilling unit containing the well. Costs to date have been significantly below budget.
Deshotels 13H (40% Working Interest / 30% NRI)
An artificial lift system (pump jack and rods) has been installed on the Deshotels 13H well. The well is currently producing 60 barrels of oil per day (18 barrels of oil per day net to Pryme). This production rate is below expectation due to mechanical problems sustained during completion of the well and the unsuccessful installation of the Packers Plus production liner. We expect this rate to remain fairly stable, with natural decline, into the future.
Definition and optimal production of the oil and gas reserves within the Deshotels 13H production unit will most likely require the drilling of an additional well, or a new lateral from the existing well, in the future. At this stage the production unit containing the Deshotels 13H well (approximately 1,000 acres) is held by production.
Deshotels 20H (40% Working Interest / 30% NRI)
Production from the Deshotels 20H also remains fairly stable at around 75 barrels of oil per day (23 barrels of oil per day net to Pryme) despite mechanical issues impeding its effective completion in 2011.
Engineering reports commissioned by Pryme indicate that a significant increase in production rate may be achieved through the installation of a lift system. A work program and cost estimates are currently being prepared with a view to installing this system as soon as practicable.
The production unit containing the Deshotels 20H well (approximately 1,200 acres) is held by production.
Further Exploration in Turner Bayou
Whilst the result of the Rabalais 35-1 and the low production rates from both Deshotels wells are frustrating, there is strong evidence supporting the existence of substantial recoverable quantities of oil and natural gas in the Austin Chalk formation within the Turner Bayou Chalk project area. It is clear that the production potential of the Austin Chalk formation has not yet been adequately tested within our acreage. We remain committed to the Turner Bayou Chalk project and to successfully testing the Austin