Pegasi announces 30-‐day production rate for its first horizontal well Tyler, Texas, August 3, 2012/PrimeNewswire/ - Pegasi Energy Resources Corp. (OTCBB: PGSI) (the “Company”) is pleased to provide investors with an update on the production of the Morse Unit #1-‐H, its first horizontal well, in Cass County, Texas following 30 days of oil production. An independent contractor reported a wellhead production rate of 288 bpd oil and 454 MCF gas at 3 AM August 3rd, 2012. This spot production rate of 364 BOE (Barrels of Oil Equivalent) per day compares with an average for the previous 24hrs of 309 BOE. The well has consistently produced high quality, light, sweet oil of an API gravity in excess of 40 degrees. The Company is currently designing an artificial lift system that it anticipates will further enhance the well’s production rate. CEO Michael Neufeld commented: ”We are very pleased with the sustained production rate of our first horizontal well. The results of the 5-‐stage fracture completion of the Morse give us great confidence in our strategy for the further development of our Cornerstone acreage, which now amounts to 30,205 Gross Acres or 20,960 Net Operated Acres of which the Company holds 12,115 Net Acres. On the strength of the productivity of the 5-‐stage Morse we now plan to drill horizontal wells of 3,000 to 5,000 ft in length and complete them with fracture stimulation in 15 to 25 stages respectively. These horizontal wells are being drilled to develop the Company’s contingent resources and their success will add significantly to the company’s 3P reserves.”
Pretty encouraging considering that this was only a 5 stage frac.
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The News Release headline states "Texas following 30 days of oil production." However the release goes on to report the results of only two 24 hour test periods, ie, 364 boed and 309 boed. So, why did they say 30 days?
I ask this question by email to the company, but have had no reply.
Makes one very skeptical of the estimated ultimate recovery numbers in their 8May12.pdf:
http://www.pegasienergy.com/articles/Pegasi%20IR%20Presentation%208...
Do you know anyone in Tyler who might give me the straight story on this small operator?
Due to recovery of proppant and frac fluids in the early stages of flow back from horizontal wells with multiple stage fracture stimulation operators will take 24 hour tests periodically. Production of hydrocarbons increase as flowback returns more frac fluids. Most reports seem to indicate that recovery of frac fluids needs to reach ~60% or greater before accurate flow rates can be established for hydrocarbons. Since operators wish to give the best test results possible they will choose the best 24 hour test during that period, in this case thirty days.
Skip - What is your opinion on these bold EUR numbers within their Cornerstone Project, particularly the comparison with the Bakken shale? For those of use with leases or future leases, it is exciting news! Thanks for your input.
BT, EUR calculations are above my pay grade. Bold projections are just that, projections. And the flow rate is not a good indicator of future production without a decline curve model. It is quite common for news releases to invoke a comparison to the latest, most popular play. I tend to take such comparisons with a grain of salt.
There was a new W-2 filed with the RRC on August 24th showing a test date of 7/19 - Jet pump assisted production of 233 bbl oil/day. reprot also suggests 4401 bbl of oil produced prior to that test. that would be roughly 4401 bbls between July 2 and July 18, or about 275 bbl/day average.
Any idea as to how much their lease operating expense is?
No idea - probably high right now as they figure out the well. Should be lower as they get it figured out.
Regarding comparison to Bakken - Its premature, as they haven't repeated the success of this well yet, nor have they clearly communicated it would be economic.
If the EUR is good/ at least modestly economic/ and its repeatable it will lead to a lot of development. If it is hit and miss to develop the area the EUR needs to be excellent to make it worthwhile to develop right now.
Have you guys heard anything new with this? We have property in Cass County and a mineral lease with Pegasi.
Hmmmm....that's really weird. I wonder what's going on?
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
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