CREDO Updates Calliope and Drilling Operational Activities
02 September 2008 - 10:01PM
Business Wire
CREDO Petroleum Corporation (NASDAQ: CRED) today updated
operational activities. James T. Huffman, President, stated, �Since
the last operational update, we have made good progress on both our
drilling and Calliope projects. CREDO has recently drilled seven
wells of which four are producers, yielding a 57% success rate. A
total of eight new wells are either awaiting completion or pipeline
connection. Twelve wells are currently on the drilling schedule for
the next few months, including six wells where CREDO will own very
substantial interests.� Huffman further stated, �We are actively
working with several companies to select and evaluate wells for
application of our Calliope Gas Recovery System. Several companies
have nominated wells for Calliope, and active technical and
commercial discussions are underway. As drilling costs increase,
Calliope offers an increasingly attractive option for adding
significant low cost reserves.� Central Kansas Uplift�To date, 26
wells have been drilled on company acreage, of which 46% have been
successful. Five of the 12 successful wells had initial production
rates of about 100 barrels of oil per day. Average proved reserves
are estimated to be 50,000 to 55,000 barrels of oil per well. The
company�s first discovery in the play has already produced about
56,000 barrels of oil in 21 months and is still producing
75�barrels of oil per day. That well is expected to produce around
130,000 barrels of oil. Since the company�s last report, six wells
have been drilled of which four are producers, yielding a 67%
success rate. Six new wells are scheduled for the next few months,
half of which will be on prospects where the company owns an 80%
working interest. CREDO has acquired approximately 100,000 gross
acres (35,000 net acres) located in prolific oil producing areas of
the play and is continuing to expand its acreage position. The
company currently owns interests ranging from 12.5% to 80% in 16
separate projects. Three dimensional (3-D) seismic has proven
effective in identifying undrilled structures. Drilling targets the
Lansing-Kansas City and Arbuckle formations at about 4,000 feet,
making the cost of drilling moderate in relation to potential
reserve value. Recent drilling successes have occurred primarily on
prospects where the company owns smaller working interests. �Our
46% drilling success in this play is outstanding, and we are
continuing to aggressively build CREDO�s acreage position,� Huffman
said. �In addition to providing good diversification to our other
drilling activities, this project is 100% oil oriented and is
expected to improve the balance between oil and natural gas in the
company�s reserve base. We expect Kansas to begin making a major
contribution to our reserve and production growth.� South Texas�In
South Texas, the initial test well on the Gemini Prospect resulted
in a dry hole. The 17,000-foot well confirmed the seismic
interpretation and found porous sand. However, the sand was water
wet and the well was plugged and abandoned. CREDO received
approximately $1,300,000 of cash for the multiple prospect package
and retained an 11.25% �carried interest� in the test well.
�Although we are disappointed with the dry hole, we received
considerable up-front cash for the prospect package and did not
incur any cost to drill the test well,� Huffman said. �The prospect
package consists of two additional Deep Wilcox prospects located to
the north of Gemini Prospect. These two prospects are structurally
different and unique compared to the Gemini Prospect. Those
prospects are being further evaluated, and if drilled, CREDO will
have the same 11.25% carried interest in the next well as it did in
the Gemini Prospect test well.� Elsewhere in South Texas, the
company has recently purchased a 15.5%�working interest in the
Escobas Field. A major workover is underway on an existing well,
and a new 15,500-foot Wilcox well has been drilled in which the
company has a small carried interest. That well is currently
producing 2.7 MMcfd (million cubic of gas per day) on a 12/64ths
choke. Texas Panhandle�In Hemphill County, the second well on the
company�s 3,780 gross acre Humphreys Prospect encountered sands in
the Tonkawa and Cleveland formations that appear to be productive
on electric logs. The vertical well has been completed in the
Tonkawa sand and tested at good rates for both oil and gas. The
well is currently waiting on pipeline connection. The company owns
a 25% working interest. The company recently purchased interests in
over 3,800�gross acres in Hemphill County and has taken over as
operator of 11 wells. The new acreage complements the company�s
Humphreys Prospect and brings its total acreage in the area to
approximately 8,300 gross acres. Oklahoma�In Oklahoma, three new
wells are awaiting pipeline connection and six wells are scheduled
for drilling. CREDO owns approximately 70,000�gross acres located
primarily along the northern portion of the Anadarko Basin where it
conducts an active drilling program. Wells generally target the
Morrow, Oswego and Chester formations between 7,000 and 11,000
feet. In Carter County, CREDO is waiting on rig arrival to drill a
twin well to its Schaff #1 which has produced 235,000�barrels of
oil. The Schaff will become part of the Twin Forks Deese sand
waterflood, and the new well will develop three oil sands that the
Schaff well logs indicate are productive and which produce in the
immediate area. CREDO owns a 41% working interest and is the
operator. In Major County, drilling is expected to commence shortly
on the company�s 1,280 gross acre Pool-Proffitt property. The
9,600-foot Lemmons #1-7 and Ball #1-18 wells will test a thick
package of stacked carbonate zones. CREDO owns an approximate 70%
working interest in the Lemmons and 50% of the Ball. Ultimately,
the company expects to drill 10 to 12 wells on the prospect. In
Harper County, drilling will commence shortly on two wells located
on the company 3,840 gross acre Buffalo Creek Prospect where 11
wells have previously been completed for production. Both of the
new wells will test the Chester formation at approximately 6,900
feet. CREDO owns working interests of 30% and 37% in the two wells.
In Southern Oklahoma, the company is participating in three
waterflood projects as part of its overall strategy to improve the
oil ratio in its reserve base. In Carter County, CREDO owns 17% of
the Southeast Hewitt waterflood unit which has already produced
685,000 barrels of oil and is projected to ultimately produce about
1,200,000 barrels. The company also owns about 22% in Phase 1, and
12.3% in Phase 2, of a Twin Forks Deese sand waterflood unit that
is being formed and is expected to produce about 1,000,000 barrels
of oil. In Love County, CREDO owns 13% in Phase 1, and 9.5%�in
Phase 2, of the Eastman Hills waterflood unit that is expected to
produce about 500,000�barrels of oil. Management Comment��I believe
that we are making solid progress on Calliope as we actively
discuss detailed commercial structures related to specific wells
that have been nominated by several companies,� Huffman said. �Our
ultimate goal is to strike balanced agreements that suit the needs
of joint venture partners, and which maximize the economic
potential of this proven, proprietary technology for the benefit of
our shareholders. We believe Calliope will offer an increasingly
competitive alternative for efficient, large-scale reserve
additions, particularly in this environment of high and rising new
well drilling and completion costs.� Huffman further stated, �We
are also pleased with the results of our drilling operations. Our
upcoming drilling schedule includes a number of wells where CREDO
owns very substantial interests. Success on those wells will have a
very positive impact on our reserves and production. As discussed
in our August 26 press release announcing the addition of Tim
Pownell to our executive team, we are actively building our
operations management capacity in anticipation of the increasing
levels of activity on both Calliope and drilling.� For more
information about the company, visit http://www.credopetroleum.com.
CREDO Petroleum Corporation is a publicly traded independent energy
company headquartered in Denver, Colorado. The company is engaged
in the exploration for and the acquisition, development and
marketing of natural gas and crude oil in the Mid-Continent and
Rocky Mountain regions. The company�s stock is traded on the NASDAQ
System under the symbol �CRED� and is quoted daily in the �NASDAQ
Global Market� section of The Wall Street Journal. This press
release includes certain statements that may be deemed to be
�forward-looking statements� within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements
included in this press release, other than statements of historical
facts, address matters that the company reasonably expects,
believes or anticipates will or may occur in the future. Such
statements are subject to various assumptions, risks and
uncertainties, many of which are beyond the control of the company.
Investors are cautioned that any such statements are not guarantees
of future performance and that actual results or developments may
differ materially from those described in the forward-looking
statements. Investors are encouraged to read the �Forward-Looking
Statements� and �Risk Factors� sections included in the company�s
2007�Annual Report on Form 10-K for more information. Although the
company may from time to time voluntarily update its prior
forward-looking statements, it disclaims any commitment to do so
except as required by securities laws.
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