Thursday, December 30, 2010

PetroQuest Energy (PQ): Niobrara Shale Update

By Andrea:

PetroQuest Energy, Inc. (PQ) recently announced that it has completed operations on its first two test wells in the Niobrara formation. The wells were designed to test differing geologic concepts relative to natural fracturing. The initial test well (Peterson #1- WI-25%) was selected to evaluate a location with less expected natural fracturing. The 4,962 foot lateral well was completed in November, but did not produce oil in commercial quantities.

The second well (Nevis #2, NRI-20%) was drilled approximately 15 miles from the Peterson #1 and tested a location where more natural fracturing was expected. The well was drilled with a 5,298 foot lateral section (20 frac stages) and was completed at an initial 24 hour gross daily rate of 831 barrels of oil and 205 Mcf of gas after cleaning up. Through the first two weeks of production, the well has averaged approximately 570 barrels of oil per day and is currently flowing at 407 barrels of oil per day. The Company estimates that the average gross cost per well for the initial two test wells was approximately $4.5 million.

Based on the results of the Nevis #2, the Company plans to proceed with a development plan in 2011 on its Niobrara acreage. The Company has a 25% non-operated working interest in approximately 20,000 gross acres (5,000 net acres) located in Southern Wyoming. Based on initial plans, the Company expects to participate in 12-15 gross wells during 2011. The Company expects to spud its third well (Hester #3, WI-25%) in January 2011.

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