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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.
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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.
Occidental Petroleum is looking into selling Western Midstream Partners. OXY focuses on natural gas pipelines in the U.S. and is worth around $20 billion, including its debt. This sale could help the company cut down its large debt of $18.5 billion, which grew due to buying other companies. Recently, Occidental agreed to buy CrownRock for $12 billion, adding more debt to its books. This comes after its huge $54 billion purchase of Anadarko Petroleum four years ago. The news about possibly selling Western Midstream made its shares go up by 5.7% to $30.81, reaching their highest value since July 2019. However, Occidental's shares fell by 1.6% to $59.56, as part of a wider drop among energy companies.
The Canadian oil and gas sector announced 27 M&A deals in the last quarter of 2023, totaling $4.2 billion in value. The biggest deal of the quarter was Pembina Pipeline's $2.3 billion acquisition of several companies including Alliance Pipeline and Aux Sable Canada. Compared to the previous quarter, the total value of M&A deals in Canada grew by 20% from $3.5 billion and jumped 95% compared to the same quarter the previous year. However, the number of deals dropped slightly by 4% from the previous quarter and was 23% less than the year before.
Rystad Energy predicts that the merged company of Diamondback Energy and Endeavor Energy will produce 819,500 barrels of oil per day in the Permian Basin in 2024. Rystad, an energy research and business intelligence company from Norway, expects the ExxonMobil-Pioneer Natural Resources merger to lead the Permian in total net production for the year, with a projection of nearly 1.4 million barrels per day. Notably, about 53% of this production will be oil. Chevron is set to produce slightly more than Diamondback-Endeavor, with Occidental-CrownRock following closely. ConocoPhillips ranks fifth, with a production forecast of just under 800,000 barrels per day. Chevron's production is 47% oil, while Diamondback-Endeavor and ConocoPhillips have 57% oil in their mix, and Occidental-CrownRock is just below 50%.