EAGLE FORDIn December 2011, the Company sold approximately 1,800...

EAGLE FORD

In December 2011, the Company sold approximately 1,800 net acres in Atascosa County, Texas, in order to focus its efforts on its acreage in southwest Fayette and northeast Gonzales counties, Texas where GeoResources currently has approximately 23,000 net contiguous acres.
GeoResources now has two drilling rigs working in its Eagle Ford project area. The Company has successfully drilled seven wells to date with three of these wells currently on production and the remaining four waiting on completion. GeoResources expects to begin frac’ing these four wells in late January 2012. Since completing its last well in August 2011, GeoResources has further investigated optimal completion practices. Among other analytical procedures, GeoResources has analyzed chemical tracers used in completing its first three wells and conducted extensive testing of cores to determine the optimal completion methodology for its Eagle Ford wells. The Company expects these efforts to improve frac efficiency on future completions. Further, as previously stated, the Company expects to drill and complete its future wells in batches. GeoResources is currently experiencing well costs of approximately $8.5 - $9.0 million in this project area and expects pad drilling, batch completions and other efforts to further reduce these costs.
As an indication of its progress in reducing well costs, the Company’s recent Newtonville #1H (55.0% W.I.) well in Gonzales County was drilled to a total depth of ~14,700 feet in just 24 days at a cost of approximately $2.8 million. GeoResources continues to improve drilling efficiencies and believes that it can continue to drill wells as efficiently as the Newtonville #1H well going forward.
GeoResources recently contracted for a 173 square mile 3D seismic survey which will be acquired by a leading seismic contractor. The Company believes the acquisition and interpretation of modern seismic data will allow it to: i) further enhance and de-risk development of the Eagle Ford carbonate; ii) evaluate other identified zones of interest (see Austin Chalk below); and iii) identify deeper exploration opportunities, potentially including Buda, Georgetown and Edwards formations which are productive in the region. The Company anticipates delivery of the processed seismic data in late third quarter 2012.
The summary below provides an update on the Company’s drilling, completion and production activities in its Eagle Ford project area.
Operated Eagle Ford Area Highlights
4 gross wells spud in fourth quarter 2011
4 gross wells currently waiting on completion
2 wells currently drilling (1 spud in late December 2011 and 1 in early January 2012)
3 gross wells currently producing
All 3 completed in second and third quarters of 2011
48% average working interest
Average first 30 day production rate of 409 boe/d
20 to 25 gross wells planned to spud in 2012


AUSTIN CHALK

In addition to its Bakken and the Eagle Ford projects, the Company continues to focus on its growing Austin Chalk (“Chalk”) position, especially in the liquids-rich areas of the play. In the Giddings field area of Texas, GeoResources has over 29,000 net acres spanning across northeast Fayette, Washington, Burleson, Brazos, Grimes, and Montgomery Counties. The vast majority of the acreage in this project area is held by Chalk production and long-term leases. There are multiple drilling locations across this project area. While current interpretations indicate that most of the locations are gassy, the Company’s West Cannon Unit #1H located in Grimes County has performed well with a high liquids content. This well averaged 1,035 boe/d (67% oil) for the first 31 days of production and has produced approximately 120,000 boe to date (64% oil). Given current natural gas prices, GeoResources does not intend to drill any gas locations in 2012 but is investigating additional potential liquids-rich opportunities.
In addition, GeoResources believes that its Eagle Ford acreage position in southwest Fayette County has considerable Chalk potential. There have been two recently completed producing Chalk wells within its acreage position that have performed well. As previously indicated, the Company participated in one of these wells, the Tilicek #1H, in which it has a 14.8% working interest. This well averaged 326 boe/d for the first 30 days of production (93% oil). The Tilicek well is operated by Denali Oil and Gas with a 70.4% working interest. Given the success of this well and other recent drilling successes in the immediate area, the Company plans to drill another Chalk well in its Eagle Ford project area in 2012. Chalk drilling in this area could accelerate in 2012 and beyond depending on a comprehensive geological review, seismic interpretation and additional drilling results.

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