Friday, February 5, 2010

Pioneer Announces Success in the Wolfberry

Pioneer Natural Resources announced at their February 3 conference call that they’re having a lot more success in the Wolfberry play. They have found out that “the Wolfcamp is more prolific than we thought just inside the Spraberry.” They are getting an additional 30 to 35,000 barrels additional by drilling into the Wolfcamp and are seeing much better results.

Lynden Energy Corp. (LVL) has drilled their first three wells down through the Wolfcamp and have outstanding results from their first well. That well flowed an average of 138 bo/day and 277 mcf/day over the first fourteen days of production. It will be interesting to see if they can duplicate that with their next wells. If so, they might be on to something!

Thursday, February 4, 2010

Callon Shifts Onshore into the Wolfberry Play

Callon Petroleum Company announced details of its strategy shift to diversify its asset base onshore on February 2. They stated “the cash flow generated from our two deepwater fields with quality, long lived resources will be reinvested into onshore conventional oil and shale gas properties.” They said they made two transformational acquisitions “extending its operations onshore into the Wolfberry oil play in the Permian Basin.” Their primary target in the Permian Basin is the Wolfberry trend.

Callon is another example of a company targeting the Wolfberry play in West Texas.

Permian Basin Gaining More Attention

The Houston Chronicle published an article on January 30 about the Permian Basin. They stated that the basin is looking more attractive and that several oil and gas companies have recently struck deals to enter the basin and diversify production away from natural gas to oil.

Recent deals that have occurred in the Permian Basin:

- Sand Ridge closed an $800M deal to buy Permian Basin Properties from Forest Oil Corp. in December
- Concho Resources agreed to a $225M deal with private sellers for Permian Properties in November
- Linn Energy said in December it would acquire properties in the Permian and Anadarko basins for $155M
- Vanguard Natural Resources closed a $55M deal for Permian Basin Properties in January
- Berry Petroleum announced in January that it would buy Permian Basin oil properties in the Wolfberry trend for $126M

These deals demonstrate that others are willing to pay large sums for Wolfberry and Permian acreage. Lynden Energy Corp.’s (LVL) opportunity is outstanding!

Harrell Well is Indeed an Excellent Wolfberry Well!

The Wolfberry is still a relatively new play and there is not much information out there. Companies are paying a lot more attention to the play and are actively acquiring Wolfberry assets. Following is what other companies are saying about Wolfberry wells and what typical Initial Production rates are.

Devon Energy says that they have growth opportunities in the Wolfberry oil play in West Texas. “The Wolfberry is a repeatable play that generates outstanding rates of return with low geologic risk.”

An article from the AAPG Explorer magazine states that operators are chasing production from the Wolfcamp and Spraberry formations (Wolfberry). They state that “initial production ranges from 35 to 125 barrels per day.

A Concho Resources Inc. presentation shows their typical Wolfberry production curve and they expect initial production from their Wolfberry wells to be 90 bo/d and 230 mcf/d.

Public information that is available clearly demonstrates that Lynden Energy Corp.’s (LVL) Harrell well is a superior well. The Harrell well is averaging 138 bo/d and 277 mcf/d over fourteen days! LVL’s future is looking brighter given their success with their first well in the Wolfberry play.

Wolfberry Update from Lynden

Lynden Energy Corp. (LVL) reported that their Harrell well produced an average of 138 barrels of oil and 277 mcf per day over the first fourteen days of production. These are excellent results and the company said that they “exceed the range of expectations for a typical Wolfberry well.”

They have also completed drilling of two more wells, the Miller Trust #101 and the Mallard 23 #2. LVL has shifted their focus away from natural gas and towards oil. They appear to have made a successful transition as their new leases are located in the Wolfberry play in West Texas in what may be the hottest new oil play in the U.S.! They have also teamed up with CrownQuest Operating out of Midland who has been very successful completing Wolfberry wells in adjacent areas. CrownQuest has the experience necessary to make LVL’s Wolfberry project a success.