Whitebark spuds high-impact oil development well
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Whitebark has spudded the Rex-4 well at its Wizard Lake oil and gas field, the first of two development wells which are expected to deliver a step change in production.
This will involve the drilling of a 1,150m vertical section at which point a tangent will be established to build the angle of the wellbore as it passes through the Viking and Joli Fou stratigraphic markers, entering the Manville Formation and then passing the critical Sparky Coal marker.
Whitebark Energy (ASX:WBE) will then drill a 2,400m horizontal section within the producing Rex sandstone reservoir before carrying out a 50-stage hydraulic fracture stimulation.
Initial post-clean up production from Rex-4 is expected to be about 300 barrels of oil and 1.4 million standard cubic feet of gas per day, which will increase Wizard Lake production to about 750 barrels of oil equivalent per day.
Ultimate recovery from the well is expected to be about 155,000 barrels of oil and 1.3 billion cubic feet of gas.
While the company had previously estimated that Rex-4 could generate netback operating income of about $4.7m during the first 12 months of operation, this estimate is based on a US$85/bbl WTI price and gas price of US$4 per thousand cubic feet.
Brent crude is currently trading at about US$102.98/bbl while natural gas trades upwards of US$6.50 per thousand cubic feet, meaning that those estimates are just a little conservative.
“It is great to see Rex-4 drilling commencement during a period of significant weather uncertainty. We expect to reach total depth within two weeks and I am looking forward to confirming oil saturation in the reservoir,” chief executive officer Dr Simon Brealey said.
“This is a great step towards significantly ramping up Wizard Lake production and company free cash flow.
Rex-4 will be followed by Rex-5 in early 2023, which will be funded by cashflow from Rex-4.
While the current well targets the north-facing proved undeveloped location parallel to the Rex-1 well to exploit the liquids rich region of the reservoir, Rex-5 will test the southern location parallel to Rex-2 and Rex-3.
Whitebark has also installed pipelines, facilities and infrastructure a further three wells (besides Rex-4 and Rex-5) at the current well pad location.
This article was developed in collaboration with Whitebark Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.