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Northern Paradox Basins Rediscovered by Zephyr01/17/2022
Zephyr Energy of the Rocky Mountains announced on Dec. 8 that its field testing of the State 16-2LN-CC well at its Paradox Basin project in Utah provided a substantial basis for further development.
Zephyr reported that after 23 days of production testing the well demonstrated the ability to extract a larger hydrocarbon resource than initially estimated. It is now planned to outfit the well and facilitate the sale and/or export of hydrocarbons.
The research may have allowed the discovery of eight high-grade hydrocarbon reservoirs under the opportunity that was initially being investigated. A total of 200 wells could be drilled, creating a potential resource of 125 million barrels of oil equivalent.
This milestone was achieved when the company's State 16-2LN-CC horizontal well became the first with a hydraulically-stimulated completion to flow hydrocarbons in the Northern Paradox Basin.
A rate-constrained daily rate of 716 barrels of oil equivalent per day (boepd) was achieved with limited pressure drawdown and a rate-constrained maximum rate of 1,083 boepd.
Based on initial simulation modeling, Zephyr concludes that 2,100 boepd plateau rates would be possible when the well is fully equipped and not rate-constrained.
In an investor presentation, Zephyr said that gas rates may reach plateaus of 10 million square cubic feet per day and 500 boepd of liquids.
Zephyr's predrill estimates of up to 0.85 million barrels of oil equivalent (mmboe) are significantly lower than the growth potential of State 16-2LN-CC resulting from production testing.
To maximize this potential, hydraulically stimulated resources must be developed instead of assuming that they are naturally fractured, as was thought before the evaluation of the most recent well data.
Zephyr forecasts that the reserve will produce strong economics for its new gas condensate wells based on a highly successful appraisal of the reserve. According to the company, up to 200 well locations are potentially available across the eight identified overlying reservoirs.
In light of the new production forecasts and realized oil prices of $65 per barrel and $3 per thousand cubic feet of gas, Zephyr calculates the well's net present value to be $12.5 million at a 10% discount rate (NPV-10).
Due to the substantial potential for an increase in project size, Zephyr's Board has committed to exploring the idea of a multi-well drilling program in the near future, as additional drilling could help better define and unlock the considerable potential value of this asset.
Zephyr's Board, however, will not rush into an investment in Paradox, according to Zephyr CEO Colin Harrington, and will only deploy company capital if the risks/rewards are favorable.
BP's South Haynesville Natural Gas Passed MiQ’s Certification with Flying Colours: a Straight-A Student
BPX Energy achieved an admirably low level of methane emissions, ranking among the best performing players in Haynesville Shale, around 0.05%! And MiQ awarded the company with an A grade certification. BPX very well may be one of the cleanest natural gas producers in all of Texas.
Crescent Energy closed the acquisition of Uinta Basin assets in Utah that were previously owned by EP Energy for $690 million, a few hundred million dollars below the original price. The accretive deal increases Crescent's Rockies position and adds significant cash flow and a portfolio of high-quality oil-weighted undeveloped sites. In addition to its acquired Uinta assets, Crescent's pro forma year-end 2021 provided reserves totaled 598 million boe, of which 83% was developed, 55% was liquid, and its provided PV-10 was $6.2 billion.
In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.
On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.
On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.