20 New Wells at EOK South
Highlights
Total wells tied-in to sales to increase to 49
Current production of 1MMcf/day to increase
substantially with revenue reflected in September
Quarter results
Plant optimization program substantially complete
generating significant cost savings
Plant now capable of transporting 40MMcf/day
and processing 4MMcf/day without upgrading
Gathering system expanded with approximately
40km of new pipeline
Development to continue in 20 well phases
EASTOK set to expand its mid-stream business
through marketing of through-put or stranded gas
Oklahoma based (ASX listed) oil and gas exploration and
production company Red Fork Energy Limited (Red Fork or
the Company) is pleased to provide an update on progress
at the recently acquired (100% owned and operated) East
Oklahoma South Project (EOK South).
The Company assumed ownership and operations of the
project in November 2009 and immediately established gas
production at the rate of approximately 1,000,000 cubic feet
of gas per day (1MMcf/day). This production level has been
maintained and increased with less than a week of
unscheduled downtime or production interruptions despite the
severe weather conditions experienced in Oklahoma during
December 2009 and January 2010.
Since the acquisition, the Companys immediate focus has
been on a program of work to stabilize and where possible
improve production from existing wells and to improve the
efficiency and profitability of the Wagoner A processing and
compression facilities. This program has been successful
generating initial modest increases in production and
significant operating cost savings through the replacement or
right sizing of equipment in the compression and gas
processing sections of the plant.
Continues.
ASX Announcement
March 29, 2010
www.redforkenergy.com.au
The Wagoner A Station is now capable of transporting up to 40MMcf/day. Under the current
configuration, it is capable of processing 4MMcf/day, with the capacity to upgrade to meet future
requirements. The direct cost of processing at the 4MMcf/day rate is approximately US$0.31
per Mcf.
The Company's wholly owned subsidiary and mid-stream company, EASTOK Pipeline, LLC
(EASTOK) has also continued to expand the natural gas gathering and water disposal system at
EOK South. A total of 19 miles (30.5 km) of gathering pipeline is under construction using three
separate construction contractors. An additional 5.5 miles (9 km) is planned and will commence
by mid-April as current projects are completed. Additional plant and system improvements are
also underway to increase well production volumes, reduce costs and improve efficiencies of
the system.
The expansion of the pipeline infrastructure by EASTOK will enable Red Fork to bring 20 new
wells into production, bringing the total number of wells currently in production to 49. This will
boost production from EOK South and this will be reflected in the September Quarter 2010
revenue numbers.
EASTOK has also been active in pursuing opportunities to expand its mid-stream business
through the marketing of through-put or stranded gas from other operators in the immediate
vicinity of the pipeline system. Successful contracting and connection of these prospects will
allow EASTOK to further expand its system, increasing its footprint in the region, and provide
increased cash flows from third party fees and payments. Importantly, the pipeline infrastructure
and compression and processing facilities owned by EASTOK at EOK South provides the only
access to the spot gas market in this part of the play.
In addition, this expanded infrastructure will provide Red Fork with the ability to proceed with its
planned drilling program at EOK South, connecting its wells to sales quickly and economically.
The Company will expand the EOK South project in phases of 20 wells and update the market
at the completion of each phase.
Commenting on this announcement, Red Fork Managing Director said EOK South was a well
timed strategic acquisition by Red Fork because of its existing infrastructure, production and
reserves in a proven gas play that we know very well. We set about re-establishing production
and improving efficiencies which we have achieved in a very short time-frame. Now we are
starting to capitalize on the growth opportunities by bringing on new wells to tie directly into
sales. This growth will be reflected in future revenue numbers and we look forward to up-dating
the market and our shareholders as we continue to develop and expand this very exciting
project.
Yours faithfully,
David Prentice
Managing Director
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