Freedom hits a roadblock in Texas’ oil-rich Eagle Ford; shares dip 20pc
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Freedom Oil & Gas has been forced to abandon one of its wells in Texas.
The explorer (ASX:FDM) has so far drilled 14 wells successfully since it started the program back in August, but ran into problems while drilling its 15th.
The Noroma 1 well was impacted by high pressure frac water that entered the wellbore and stopped Freedom from drilling to the planned total depth.
Freedom told investors late on Thursday that after several days of attempted recovery, it was unable to salvage the wellbore.
The company made the decision to temporarily abandon the wellbore, except for the top-hole section which will be reused at a later date.
The news sent the share price down 20 per cent to 12c on Friday morning.
To stop the same thing happening again, Freedom plans to let the reservoir pressure decline by beginning production from all of the newly drilled wells before it moves onto drilling other wells.
In the meantime, the company has rented its drill rig out for the next two months to give it more time to evaluate oil prices, well performance and production timing prior to resuming drilling.
Oil prices are ticking up from their December nadir, with the US benchmark WTI hitting $US52.21 and the North Sea marker Brent touching a high of $US61.18.
Freedom is exploring the Eagle Ford Shale — one of the most prolific and established shale oil and gas locations in the US.
Following the two-month hiatus from drilling, the company plans to drill another four wells once it has its rig back.
Freedom will then decide in late March or early April whether to extend its drilling program beyond the initial six month period.