The $1.4 million will increase shareholder value, imo
Round 1: Workover shut-in wells with mechanical problems:
Of the 29 inactive and currently economic wells acquired, 11 wells have been selected for the initial round of mechanical workovers. These are wells that have been shut-in for various mechanical reasons, including parted rod strings, a stuck pump, or a tubing leak.
The investment to necessary to bring these wells back online is expected to be modest, estimated at between $15,000 and $25,000 per well.
The expected first month’s production from these wells is estimated to be around 200 BOPD from these 11 wells without any stimulation beyond that encompassed in the mechanical workovers, namely a regular acid stimulation.
The acid stimulation is aimed at cleaning the perforation tunnels and near well bore restrictions to maximize oil flow. An increase in production would be expected from this type of operation, however no additional uplift has been factored into the 200 BOPD production expected from the mechanical workovers.
Round 2: Workover shut-in horizontal wells with advanced stimulation potential:
There are 18 wells in this category, which have been identified based on their individual production history, the structural position of the well in the field, and the porosity trends across the field. These wells have been examined by our reserve auditor and have been assigned a 4 times uplift in production from the previous shut in rate shown in our current reserve report.
This uplift was developed using data from immediately adjacent (but outside our project area) well bore treatments. The 18 wells could collectively add an additional 1,400 BOPD to the project in the first month following the treatment. The treatment for these wells is being designed by a leading oil service provider using state of the art reactive fluids and diversion material. Total expenditure associated with this operation is expected to be around $100,000-$150,000 per well.
These first two initial workover programs are expected to substantially increase the acquisition assets production rate.
Round 3: Proved undeveloped drilling
Samson has identified a total of 37 infill well locations that could be drilled. The majority of these 37 infill wells locations are extended laterals. Only 13 of these are included in our current reserve report due to capital constraints imposed on that estimate. These wells are expected to cost $2.8 million and are economic in the current pricing environment.
They are, however, a third ranked investment priority as the capital efficiency associated with the initial and second round workover programs is superior to drilling wells in the current price environment. All drilling locations are within the boundaries of the various fields acquired and are immediately adjacent to existing production.
SSN Price at posting:
0.6¢ Sentiment: Buy Disclosure: Held
