Friday, August 20, 2010

San Augustine County, TX: Bossier Shale Update: Crimson Exploration

By Andrea:

Crimson Exploration Inc. (CXPO) announced today, August 18, 2010 that it completed it's first well in San Augustine County, TX in the mid-bossier shale. Press release below:

In San Augustine County, Crimson Exploration Inc. (CXPO) successfully completed its first operated well in the Bruin Prospect Area. The Grizzly #1 (55% WI) was drilled to a measured depth of 18,100 feet with an approximate 4,200-foot horizontal lateral in the Mid Bossier Shale and was completed with 14 frac stages. The Grizzly #1 continues to clean up and is currently producing at a gross restricted rate of approximately 11.5 MMcfd on a 16/64" choke with around 9,100 psi flowing casing pressure.

Mr. Allan D. Keel, Crimson's President and CEO, stated, "With the successful completion of the Grizzly #1 well, Crimson has validated the reserve potential of the Mid Bossier Shale in its Bruin Prospect Area." Mr. Keel went on to say "based on well performance, we could have flowed the Grizzly well at significantly higher rates but have decided to use industry-best practices for reservoir optimization to maximize ultimate recovery." With respect to the recent successes in the Schwarz #2 and Catherine Henderson A-7 wells, Mr. Keel said, "The successful execution of our Liberty County drilling program continues to provide Crimson with the production and cashflow base that allows us to continue our Haynesville and Eagle Ford Shale development as well as pursue additional growth opportunities within our deep inventory of lower risk, high quality conventional prospects."

The 11.5 MMcfd test rate on the Grizzly well is reflective of Crimson's strategy that restricting rate and pressure drawdown on Haynesville and Mid Bossier Shale wells increases the Estimated Ultimate Recovery (EUR), results in a shallower and more stable decline curve, and delays the need for costly compression. Crimson adopted this strategy based on the experience attained by other operators in this trend, core studies that substantiate the loss of fracture conductivity at higher initial drawdown rates, and service company studies that indicate potential pinching off of available reservoir at higher production rates. Data from wells produced at restricted rates in the trend suggest that although this methodology provides lower production in the first few months of flow, the cumulative production curve compared to higher rate wells crosses in less than a year with the restricted rate wells flowing at higher rates and pressures at the point they cross, substantiating the belief that EUR is benefited at little to no loss of present value.

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