I can't really answer it since we're not privy to that information. If there is any O/G experts out there I would love to hear some details on this as well.
I can only assume that management have spent a great deal of time investigating the economics of re-entering A-2 VS. starting fresh with A-3. A-3 will likely be positioned in a better 'sweet spot' if management have gained anything valuable from the past 2 or 3 years.
Compare it to renovating an old house falling to pieces in a bad location or buying a brand new one in a nice suburb and moving straight in.
They must have found that re-drilling a new well is more economical than re-entering the co-mingled mess that is A-2 (which would likely require re-drilling the well for horizontal fraccing purposes anyway?).
Hopefully this means they have already taken into account the timing of the work (ie that it is quicker to produce a successful horizontal frac out of A-3 than it will from A-2. Time = Money). If it takes 18-24months of approvals to get A-3 started, but would have only taken 6-12months to patch up A-2 for horizontal fraccing....then this was another poor call by Management. They should do whatever is quickest.
For the time being A-2 is still serving a purpose for data collection while they prep for A-3.
At this point in time, I'm all for them starting fresh with A-3 (as long as it's not another 18-24months for some action). I think it will be a positive in the future that management can 'collect data' at A-2 but still proceed with horizontal fraccing at A-3.
In theory, A-2 can be forever be used by NWE to collect data and learn about each layer (starting with bringing the C layer into production, then investigate the others). Lets just hope A-2 will go down as the only 'data colllection' well in the companies history.
If A-3 is labelled as a horizontal 'Data collecting' well....
RUN.
NWE Price at posting:
1.3¢ Sentiment: None Disclosure: Held