Lynden Energy Corp. released an update on its Tubb A#1 Wolfberry well. This is the first well that Lynden and Crownquest have drilled at their Tubb Prospect Area. This well averaged 109 barrels of oil per day over the first 23 days and 106 mcf/da in the eleven days since it began producing gas. Lynden has a 35.55% working interest in Tubb and it is likely that with the Tubb production, Lynden is meeting their projection of 500 boe/d. Of additional significance is that the oil gravity is 43 degrees API which means that the oil that Tubb is producing is of the highest value!
The news release says "Initial results from the well have exceeded management's expectations and are suggestive of the significant development potential for the relatively untested Tubb Prospect Area." It also states that there could be approximately 170 gross wells developed on the acreage.
Since the market appears to be valuing Lynden on the West Martin and Wind Farms acreage only due to that being the area that has current reserves, success at Tubb has the ability to dramatically increase value. Tubb is on the eastern edge of what is considered to be the fairway of the Wolfberry Trend but if it is ultimately proven to be an area that is developable, then the market should start assigning value to Lynden's Tubb land. Lynden's net Tubb acreage is 2,470 acres and a valuation of only $10,000/acre would increase Lynden's value by $25 million. Of course, if the land ultimately becomes as valuable as typical Wolfberry land, then it's possible that values could approach the $35,000/acre that is currently being paid for Wolfberry land. This news release is indeed exciting news!
Of additional note, Chesapeake received approval to revise their current S150H horizontal well permit at Mitchell Ranch last week. The revision changes the lateral length as well as revises the well type from an injection well to a producer/oil well. Chesapeake is actively continuing their drilling at Mitchell Ranch and the change to a producer well is a good indicator.