Quicksilver (KWK US), a very large company out of the USA has just reported on, amongst other things, their Niobrara project. The results appear to confirm everything that ETE reports have been suggesting regarding the flow rates from verticals and horizontal wells. I have attached a segment from a live "chat" discussing their overall results. The following comment was made by Glenn Darden, President and Chief Executive Officer, in response to a question on their Niobrara activity. They are also very involved in numerous other US shale basis and are therefore very experienced. Quote "In Colorado where we have assembled 210,000 acres in what we now have established the oil window of the Niobrara, our initial drilling results have looked better with additional production run time. We have drilled and completed six wells testing the Niobrara, the last of which is a horizontal well. All of these wells are producing oil. We completed the first three vertical wells with oil fracs and the second three wells, two vertical and the horizontal, with a different style gas frac. This technique has shown significantly better results. The horizontal well which fracked only about 1500 feet of a 4500-foot lateral has a 45-day production average of 230 barrels of oil equivalent per day, primarily oil. The two vertical wells completed in this manner are steady producers with the best well averaging 120 barrels of oil equivalent per day; again, mostly oil over the same 45-day period. Our initial drilling covered an area approximately 30 miles in an east-west direction. We begin drilling again next month with a series of horizontal and vertical wells. This is a bit different than we had announced but with our vertical success we will drill a few more vertical wells to test this as well. While we anticipate mostly oil from this project, the company will also begin work on an initial gas gathering system to capture the rich gas and NGL stream. Based on completed well costs of approximately $3.5 million per vertical well and approximately $6 million per horizontal completed well, we believe the economics will be compelling, in excess of 40% rates of return, and we have lots of room to run. We also believe these costs will go down as we move into development. Our land team is working on multiple drilling permits currently to be prepared to accelerate this project."
ETE Price at posting:
13.5¢ Sentiment: Buy Disclosure: Held
