Monday, June 18, 2012 by Bevis Yeo

Grand Gulf Energy increases stake in Arkansas oil prospect, drilling to start soon

Grand Gulf Energy (ASX: GGE) has increased its stake in the Leduc Reef prospect in Lafayette County, Arkansas, to 22% from 14%, giving it increased exposure to a 1.2 million barrel of oil target.

The wildcat exploration well targeting the prospect is expected to spud in late July or early August and will be drilled to a total depth of 8600 feet (2621.3 metres).

Production is expected to range from 100 to 300 barrels of oil per day and there is potential upside for up to 12 million barrels of recoverable oil to be found.

The Leduc Reef prospect is a new play type for the area and its success will open up further opportunities for Grand Gulf Energy, which has the right to participate pro-rata in any new prospects generated in an upcoming 3D seismic survey.

The secondary objective lower Smackover Formation has its porosity development proven in the nearby Midway Field where over 60 million barrels of oil have been produced.

Grand Gulf Energy is paying US$280,000, or 26.66% of the initial well costs, to earn its 22% working interest in the prospect.

In a success case the company will have to pay a further US$168,000 as its share of completion and facilities costs.

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Replies to This Discussion

Thanks

Skip do you feel like this play is why we were seeing leasing activity in T22 r12W in north Bossier?:

Not after Paul Hess's comment about the play being in N Lafayette.  I wouldn't think the Leduc Reef prospect would extend far enough south but I haven't found anything yet to confirm that. That far north would call into question the prospects of productive Brown Dense IMO.

The July State Mineral Auction will include a 200 acre state tract in 23N - 14W that is nominated by JB Land.  That may signal that the initial phase of leasing is winding down and development may be in the near future.  Energy companies usually take their private land leases first and don't take state leases until they are firming up drilling plans.  A state lease is for a one year term and cost additional monies to extend.  Most operators don't want to pay for an extension.

As i stated once before on the North  Bossier thread, someone has there hands on a 3D survey that was done in this area from 2 years ago!  Berkshire operating has 3 wells in T22 r12w that were drilled to smackover.

But not to the Brown Dense.

Is a pilot well considered the same as a test or exploratory? One of the reps from Merit told a landowner that the company they represent was doing a pilot well.

I'm unsure if there is a specific definition.  I have seen the term Pilot Hole used in relation to horizontal wells where the vertical portion of the wellbore is drilled through the entire target formation in order to determine where best in the formation to drill the lateral.  This is prevalent where there are few existing nearby wells which could be used to help determine the True Vertical Depth for the horizontal wellbore.  The well is then plugged back to a shallower depth where the driller kicks off the lateral.

Without referring back to Sonris on those Berkshire wells in T22r12w, I believe they were drilled to 11,600 ft. TD.  They were permited to 12,000 i believe.

Their maximum depth penetrated, as opposed to the production depth, is short of the Brown Dense by about 500'.  It is helpful to keep in mind that the Smackover is not the Brown Dense.  The Lower Smackover is the Brown Dense.  And in general depending on location the Brown Dense lies about 1000' deeper than the top of the Smackover Reservoir A.

Would 3D seismic show whether the brown dense is a possible play?

The answer to that is above my pay grade, inthestix.  I can say that I have seen more than one lease by J B Land in the area we are discussing which specifically excludes all of the Smackover including the Brown Dense.  And at least one that also excludes the Haynesville.  I suspect that the leasing is related to a horizontal liquids play but it is highly unlikely to include the Smackover.  At this point my best guess would be a CV liquids play but it is certainly possible that other shallower zones may be involved.  Where they can get them, companies take "all depth" leases.  When they run up against savvy mineral owners with experienced O&G attorneys they often have to get what they came for without anything extra.  When that happens they file a Memorandum of Lease in the public record to hide the specifics.

Thanks Skip, we appreciate your advice. Like you have said in the past, time will tell!

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