opl and neo Coverage in EnergyReview.net
California dreaming to pay off for undervalued junior,BR.
Tuesday, February 07, 2006
Having completed a successful oil and gas drilling program in the energy-hungry Californian market, Australian junior Nuenco NL is planning to monetise its South East Lost Hills finds and tackle North Yolumne-1, targeting a potentially 100 million barrel prospect.
Anthony Kain, Managing Director, Anzoil (Nuenco) NL
Pumping unit now in place over Jack Hamar 1-1
Currently trading at under 4 cents on the ASX, Nuenco (NEO) was actually worth between 6.2 cents and 11.6 cents per share with a weighted average of 7.4 cents, analyst Aegis said in a December report that was commissioned by Nuenco.
The South East Lost Hills area lies in the San Joaquin Basin, California. It is believed to be an extension of the rich Lost Hills olfields discovered early last century.
The company and partner Orchard Petroleum have made six commerically viable finds at the Jack Hamar oil and gas field from six wells drilled. The field comprises a shallow gas play with deeper oil prospects.
The joint venture has started oil sales from Jack Hamar 1-1 and are looking to start gas sales from the field shortly.
Operator Orchard is negotiating gas sales with interested parties. Gas pipeline delays have been resolved but further test work is needed to determine sustained production levels before the pipeline will be connected.
The two partners have undertaken a full-scale fracture treatment of Jack Hamar-1-1 in California to stimulate oil and gas recovery.
Fraccing of a small 3.5-metre zone above the much larger oil-saturated Monterey shale section resulted in about 150 barrels of oil being produced mainly from initial natural flow, and the first oil sale from the project.
"Once the initial flow rate stopped – which is common on these Monterey fractured shale wells – a pumping unit was installed," Nuenco managing director Anthony Kain said.
"Now that the unit has been installed, production perfoemace can be monitored and once all frac fluids have been recovered, there will be a better indication of the well's potential. Production from this small perforated section will be carefuly monitored before increasing the perforated interval or moving to another section."
While there has not yet been any production from the Monterey zone itself, the testing indicated that those shales could contain a substantial oil resource, according to Nuenco.
"A petrophysics study now being completed on the Monterey has come up with very promsing results indicating far more oil in place than previous estimates based on geological mapping alone," Kain said.
"It has also indicated that the better Monterey zones may lie beaneath the perforations now under test."
Orchard and Nuenco are now preparing technical meetings to consider plans for development of the entire South East Lost Hills area.
Planning for the drilling of additional exploratin wells is also progressing and this drilling should start in the next quarter, according to Nuenco.
Participants in the Jack Hamar Gas Field Project are: Nuenco LLC (50%); and Orchard Petroleum Inc (50%). Interests in the Deeper Jack Hamar Monterey Oil and Gas Field Project are: Orchard Petroleum Inc (62.5%); and Nuenco LLC (37.5%).
Meanwhile, Nuenco also has its eyes on a potentially large oil field elsewhere in the San Joaquin Basin.
Nuenco has a 19.9% interest in Canadian company, Statesman Resources, which is currently involved in drilling the North Yolumne-1 well.
The mapped prospect, called the South Buena Vista Prospect, has the potential to contain over 100 million barrels of recoverable oil, Nuenco said.
Statesman is paying 25% well costs to earn a 12.5% working interest in about 6,000 acres of leases covering the prospect. The well, to be drilled to a planned total depth of 12,500 feet (3810m), will test a large, 3D defined Stevens Sand objective.
Interpretation has linked the prospect to the adjacent 113-million barrel Yolumne Oil Field.
Production wells at the Yolumne Field have flowed more than 2,000 barrels of oil per day (bopd) and produced up to 4 million barrels of reserves per well, Nuenco said.
The South Buena Vista Prospect joint venture is now nearing total depth on North Yolumne-1.
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