Oil and gas junior Eon NRG (ASX: E2E) has hit oil pay in the first well drilled in its Powder River Basin acreage in Wyoming, US.
The onshore US-focused explorer and producer drilled the Govt Kaehne #9-29 well in late November, reaching a total depth of 6,460 feet (1,969m) two days ahead of schedule.
In an update today, the company said log analysis conducted by Schlumberger following completion of the drilling has indicated more than 30ft (9.14m) of gross pay from the well’s primary and secondary target formations.
Schlumberger’s calculations resulted in a total of 21ft (6.4m) of net pay in the Govt Kaehne #9-29 well, with 14ft (4.27m) encountered in the primary Dakota sands and a further 7ft (2.13m) in the shallower Muddy sandstone.
Both formations are present and productive in the region. According to Eon NRG, the Muddy formation produces throughout the Donkey Creek field from similarly thin intersections and two wells in the southern portion of the field have produced cumulatively 95,000 and 64,000 barrels of oil, with no water and very little gas.
“Good to excellent oil shows and gas shows exceeding 1,000 units in each of the formations further support the presence of producible hydrocarbons within each of the formations,” the company reported.
Eon NRG managing director John Whisler said the company is confident that production from the well will prove to be “economic”.
“The results to date from the logs on the #9-29 well have confirmed our understanding of the reservoir and give us confidence to continue with our future development plans,” he said.
Eon NRG said completion of the well should begin within 30 days, at which time swab test rates can be established.
First delivery of oil to the refinery is anticipated in January with payment for these deliveries expected within the following month.
The company said its Govt Kaehne #9-29 well has demonstrated that management can effectively identify and execute the drilling of a successful well and forms a strong base from which to launch the next phase of its development plan.
“The company continues to evaluate production and drilling opportunities and expects to acquire additional production/drill additional wells in 2020,” it stated.
Eon NRG has a 61% working interest in the Govt Kaehne #9-29 well, located in its 15,000-acre Powder River Basin lease holding.
The Powder River Basin has a long history of oil and gas production and has attracted large operators such as Anadarko Resources (NYSE: APC) and Chesapeake Energy (NYSE: CHK).
In addition to onshore US exploration and development acreage, Eon NRG 100% owns and operates long-life oil and gas production assets in Wyoming and California.