New Standard provides update on Atascosa project production
WEST PERTH -- New Standard Energy Limited (New Standard) confirms 30-day Initial Production (IP) rates for the Peeler Ranch-5H and 6H wells, located in the company’s Atascosa Project in the USA, of 417 and 374 boepd respectively with oil cuts in excess of 90%, which is in line with Company expectations for the wells.
Up to the end of June, more than 27,000 boe has been produced from the two wells.
New Standard Energy MD Phil Thick said he is very pleased with the results from the Company’s first two operated wells, especially given the current market prices for oil.
“We are encouraged by the results and costs associated with our first Eagle Ford drilling experience and are eager to continue that success with additional drilling activity planned to commence within the next 6 months,” Mr Thick said.
Total costs for the Peeler Ranch wells, including all site preparations, drilling and completion costs, came in under $6.5 million per well, significantly enhancing the expected internal rate of return for the wells.
“These two wells have not only been completed well under our initial budget expectations, but have been approximately $2 million below the cost of the Peeler Ranch-4H well drilled last year, which shows the continued downward pressure on costs and the great opportunity we have to keep driving well costs down as we move forward. Additionally, it is great to be generating such significant income for the first time,” Mr Thick said.
The Peeler Ranch wells and additional Eagle Ford drilling and production activities will be funded by New Standard’s debt facility with Credit Suisse for up to $45 million.
New Standard made an initial draw of $9 million of a senior secured facility to fund the remaining costs for the completion and production tie-in costs for the Company’s Peeler Ranch wells. This is in addition to the $5 million in equity funding already contributed by New Standard. The next draw down is expected to take place later this year and will contribute towards funding the next two wells at the Company’s Atascosa Project.
New Standard has also formalised a hedging program covering 80% of the oil production from the seven wells now in production at the Atascosa Project, to protect against any potential future fluctuations in the oil price and ensure the Company can confidently service its loan commitments.