Oil Discovery – Riddle Well No 7 (Kentucky USA – Westralian Gas and Power 100%)
The Board of Westralian Gas and Power Ltd is pleased to announce a significant oil discovery on one of its oil leases in Kentucky USA.
The Company’s Managing Director Stephen Thomas is on site in Kentucky USA directing operations and he reports as follows:
“Westralian Gas and Power Limited through its wholly owned subsidiary Sunset Energy LLC has made a significant step into becoming an established oil producer in Kentucky with its drilling of the Riddle #7 well on the recently acquired Riddle lease.
The Riddle #7 well was spudded on Friday 30th of March.
Nearby wells have had significant shows of hydrocarbons in the Stones River (between 655 and 770 ft) and Murfreesboro Formations (1000 to 1100Ft).
During drilling the Stones River was intersected at 487 ft with no significant hydrocarbons encountered. At 755 ft the well encountered good shows of gas over approximately 10 ft and it flowed to surface through the booie tube. Drilling continued without any liquid hydrocarbons encountered.
The Murfreesboro was reached at 805 ft and drilled to 975 ft by the end of the drilling day.
Work recommenced at 8.00 am on Saturday 31st. Drilling began with an expected target zone at 1100 ft anticipated to be reached at 10.30 am.
At 8.15 am the drill intersected live oil at 995 ft. The oil blew to surface with a strong gas flow into (and over) the mud pit through the booie line for a distance of over 60 ft through the 4.5 inch pipe. See figures 1 and 2.
Drilling ceased and a control valve with flow line was attached. The flow line was attached to the storage tank some 100 ft away.
The well was then left to flow unassisted through the 2.5 inch control valve (choked back by 50%) into the tank.
Initial measurements showed the well to be flowing at 1 barrel of oil per minute. The 115 barrel tank was filled to spill point within three hours whereby the oil was transferred to a truck for transport to the refinery.
The flow period was from 9.00 am to 4.00 pm with a short interruption for the oil transfer. The well was shut in at 4.00 pm having produced approximately 155 barrels over 7 hours.
The wells production will now be assessed over the next week to establish a sustainable production level.
Sunset Energy LLC has two other targets already permitted to drill in this lease over the next 2 to three weeks.
We believe this to be a very exciting step for the Company.”
Kentucky USA Update
The Company through its wholly owned subsidiary Sunset Energy LLC has built a portfolio of 5 oil leases with a total area of over 1,000 acres in Kentucky USA near the city of Burkesville. The Company is in the process of finalising a sixth acquisition and is actively pursuing a number of other acquisitions. The oil leases are all 100% owned by the Company (through its subsidiary) with the only encumbrance being a 12.5% landowner’s royalty on each lease.
The Company is currently assessing a number of producing wells which were acquired with the above 5 oil leases and it expects the oil production from these wells will exceed the original estimate of 15 barrels per day following a re-work program.
The Riddle Well No 7 is the second in a seven well program which commenced last week with Thomas Well No 1. That well is still in test mode with oil shows at the bottom of the well. Comparable wells in the area have taken some time to settle down before sustainable production occurs and the Company will continue with this well in test mode over the next few weeks.
As reported above the Company has a further two wells permitted on the Riddle lease with drilling expected to occur over the next two to three weeks.
With oil prices around US$60 a barrel and an exchange rate of 80 cents the company expects around A$65 per barrel revenue after deducting the landowners royalty. The wells being drilled are relatively shallow at around 1,000 feet with total well costs around US$10,000 –US$12,000 for the deepest wells.
The payback on these wells with even modest production is therefore extremely short and in fact the above Riddle No 7 well has already produced enough oil to cover its cost with oil flows continuing overnight.
The Company is excited at the prospect of further drilling of these low risk, low cost wells which are 100% owned by the Company and capable of producing profits from even modest production. The significant acreage position and the ability to drill wells 400 feet apart means the Company has the opportunity to drill a number of wells on each lease all in the one region with existing power infrastructure on each lease and a refinery only 25 miles away.
The Company intends to continue with its lease acquisitions in Kentucky USA to build on its existing portfolio and given the success of the Riddle Well No 7 will consider extending its current seven well drilling program.
Peter Briggs Chairman
WGP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
