Sugarloaf Gas and Condensate Project >> Current Status - Sugarloaf AMI - June 2010
To date over 25 modern exploration and appraisal wells have been drilled into the targeted Austin Chalk and/or underlying Eagle Ford Shale formations within the area designated as the Sugarkane Field. Other horizontal wells are either planned or presently underway. Seven of these existing wells are within the Sugarloaf AMI, one well currently being drilled by Hilcorp Energy in the Longhorn AMI to the North East of the Sugarloaf AMI, over 15 wells have been drilled by ConocoPhillips either adjacent to or nearby to the Sugarloaf prospect.
Very encouraging initial rates of production have been achieved by wells within the Sugarkane Field which have shown a high condensate to gas ratio significantly improving the field economics.
Prior to December 2009, 3 horizontal wells were drilled within the Sugarloaf AMI, with two of these wells, Kowalik -1H and Kennedy -1H, having been tied in to the sale lines. As at the end of 2009 these two wells were producing at low comparative rates with further completion and stimulation activities required to optimise production rates. The third well, Weston – 1H requiring completion and stimulation.
The first phase of the Hilcorp Farmin (see separate page for details of the Hilcorp farmin at Sugarkane) began in the fourth quarter of 2009 and was completed in early 2010 with the fracture stimulation of the 3 existing Sugarloaf AMI horizontal wells of which 2 are presently on production.
The initial production based on the average of the first 60 days production from the stimulation activities on the existing Sugarloaf wells are
The second phase of the Hilcorp Farmin began in early 2010 with the drilling of three new horizontal wells, Easley-1H, Morgan-1H, and Rancho Grande-1H. The three wells were drilled by Hilcorp Energy who took over operatorship at the Sugarloaf AMI in early 2010 as part of the farmin arrangements.
These new wells have been drilled efficiently with a combined lateral length in the Eagle Ford Shale of approximately 13,000 feet. Stimulation activity commenced in April 2010 and in early May Eureka announced the initial production rates achieved on the first two wells, Easley-1H and Morgan-1H. These wells are already tied into the main sales lines and all production was immediately flowed to sales.
Initial Production rates were achieved as follows:
Initial 30 day average production rates were achieved as follows:
The costs of all drilling and stimulation farmin operations are carried 100% by Hilcorp who receive priority receipt of sale income until payback. Accordingly, Eureka’s capital commitments over this period are minimal and essentially restricted to maintenance and acquisition of new lease holdings.
Importantly, the time and cost for drilling horizontal wells within the Sugarloaf AMI has reduced substantially as the field moves from appraisal to development. Such improvements have a very positive effect on overall field valuations. The recently drilled farmin well, Rancho Grande #1H, was drilled in 18 days.