kowalik spuds kennedy ongoing testing, page-33

Safiande - 14 Aug'08 - 07:15 - 36097 of 36098


http://www.oilbarrel.com/home.html


Oil Barrel 14 August 2008

“Empyrean Energy Takes Encouragement From Kowalik-1H Drilling As Sugarloaf Project Sustains Forward Momentum

The London-based Empyrean Energy continues to make good progress with its high impact Sugarloaf project in Texas, sustaining the forward momentum from work carried out earlier this year.

With some established production behind it from the Margarita project on the Gulf coast the AIM-listed group has always been taken seriously by investors. By and large, it has been insulated from the slings and arrows of outrageous fortune that have struck down many a peer E&P firm in recent times.

If anything, the only erratic share price movements have been upwards. In April, Empyrean shares surged almost 90 per cent on news that a well on Sugarloaf tested commercial quantities of gas and condensate.

At the time, this was the first of a series of discoveries to test in the project area with the Texas Crude Energy joint venture block A-3 well flowing at 1.9 million cubic feet of gas per day and over 460 barrels of condensate per day. The company has subsequently talked of flow rates significantly above this.

However, Empyrean’s shares have been known to drift following these lofty peaks, something that may only be remedied once more production starts seeping through.

In its most recent update, Empyrean said that early gas readings from the Kowalik-1H well, now underway, were above expectations. It said that elevated gas readings increased from a background of 120 units to approximately 400 units when drilling through the Austin Chalk interval.

Operator Texas Crude Energy is targeting the same interval that produced in the earlier Block A-1 and A-3 wells. It plans to use horizontal drilling to access the interval. The well has now reached the vertical pilot hole target depth of 11,970 feet, which will be used as a start point for directional drilling to access the target area.

These are early findings and early days. As oilbarrel.com noted in its last coverage of Empyrean at the start of July, caution is necessary with the Austin Chalk reservoir.

Nonetheless, in the Austin Chalk some 5 tcf of gas and 600 million barrels of oil have been produced from the Giddings and Pearsall fields alone. Though Empyrean is the smaller partner here these numbers most certainly are not.

Empyrean also updated investors this week on the Kennedy-1H well, which could be the fresh production investors are seeking. This is currently shut-in as the operator installs a production facility to tie-in the well to a nearby gas transmission line.

Remember also that this is an area of the US with extensive energy infrastructure ready to eat up any new gas supply that comes along.

At the time of shut-in the well was producing at approximately 180,000 cubic feet of gas per day, slightly lower than earlier figures released, and 33 barrels of condensate per day.

Texas Crude Energy plans to monitor initial production performance from the well to assess whether to perforate and fracture stimulate the additional 3,000 feet of lateral section.

What can be said is that output from Sugarloaf seems likely to be an exponential step up from what is being produced from Margarita. In time, the operator is expecting a 44 well development on Empyrean’s acreage, and in a mature gas-hungry market such as the US this is a big deal.”