Eon NRG (ASX: E2E) has pegged new ground in one of the most active oil and gas basins in the US, the Powder River Basin in Wyoming.
The North America-focused energy company today announced it had acquired exploration rights covering 640 acres (2.6sq km) in Converse Country, located between its existing operated Borie and Silvertip oilfields.
The rights are being leased from the State of Wyoming on an initial five-year term and can be held by production on completion of successful wells.
Eon said this was just the first of several lease acreage acquisitions it planned to make as part of the company’s future development strategy.
The company is proposing an “aggressive” drilling campaign for 2019 and planned to continue its acquisition program for new drilling prospects in the basin “for the foreseeable future”.
“The company is looking to acquire sufficient acreage to allow exploration to be carried out across multiple prospects and multiple formations,” Eon stated.
The Powder River Basin has a long history of oil and gas production from more than 4000 feet of stacked pay and has attracted large operators such as Anadarko Resources (NYSE: APC) and Chesapeake Energy (NYSE: CHK).
Exploration and production in the basin have increased significantly in recent years from horizontal lateral wells being drilled in the unconventional rocks of the Niobrara and Mowry shale.
Horizontal laterals are also being tested in the conventional sandstones of the Parkman, Sussex, Shannon and Turner formations.
According to Eon, potential drilling opportunities exist in the Minnelusa formation, which has been successfully drilled since the 1960s and has “good geological support for the presence of hydrocarbons”.
The company said more than 1300 wells have been drilled in the formation with an average cumulative oil production in excess of 320,000 barrels of oil per well and an average initial production range between 185 and 300 barrels of oil per day.
In addition, Minnelusa production is currently from conventional wells with depths of less than 8000 feet and improvements in drilling technology have significantly reduced drilling and completion costs in the region down to less than US$1.5 million per well.
Eon said it would also target the Parkman, Sussex, Shannon and Turner sandstones.
Eon has projects in four other producing oilfields in the US – the Borie and Silvertip (which also produces gas) fields in Wyoming, and Sheep Springs and Round Mountain in California.
The company also holds cobalt claims in Nevada and is currently working to identify further potential exploration prospects to expand its battery minerals division.
Shares in Eon were steady at A$0.008 by afternoon trade.