Australian-based Fremont Petroleum Corporation (ASX: FPL) has “confirmed conclusively” that the Niobrara Formation shale within its wholly-owned Pathfinder field is highly prospective for oil and gas, after an initial production rate of 220 barrels of oil equivalent per day was achieved from testing of the JW Powell vertical well.
Located near to the prolific Wattenberg field of the Denver-Julesburg Basin in Colorado – considered the fourth largest oil and gas field in the US where landholdings sell for up to US$15,000 (A$21,000) per acre – Fremont believes Niobrara has “huge unlocked value” and will be highly sought-after given the presence of more than 500 vertical well locations.
JW Powell’s 80:20 gas-to-oil ratio is consistent with Wattenburg’s hydrocarbon production and reinforces the company’s belief that Pathfinder is an extension of the DJ Basin.
The well has delivered an immediate boost to Fremont’s oil revenues, and substantially increased the company’s natural gas inventory and reserves for future gas offtake and sales.
New completion method
In collaboration with oilfield services company Schlumberger, Fremont deployed a new stimulation and completion method into the B and C benches of the Niobrara Formation of the JW Powell #23-25 well, creating a simulated horizontal bore within the well of over 365m.
It is the first time Schlumberger has combined its proprietary completion technique with radial drilling technology in an unconventional field within the US.
The technique significantly increased the stimulation contact within the formation and provided enhanced production rates for a typical unconventional vertical well.
JW Powell #23-25 recorded a peak gas flow rate of 2.1 million cubic feet per day but this was choked back to allow for oil production.
Fremont expects it will increase well productivity to improve the estimated ultimate recovery from the well – a calculation of the amount of oil and gas a reservoir will produce.
Managing director Timothy Hart said Schlumberger’s work brought one of the oldest oilfields in the US online while demonstrating geological similarities between Pathfinder and Wattenburg.
“We have brought the very latest well stimulation and completion technologies to make Pathfinder much more productive and a great deal more valuable,” he said.
“This is indeed a pioneering moment in the US oil and gas shale revolution and with over 500 drilling locations at Pathfinder, we are only just getting started.”
Mr Hart said the company will now return to the Vespucci #1 well, first spudded in November, to drill test the Niobrara Formation.
“We plan to mobilise by mid-April and with only [approximately] 300m of drilling to go, we expect much quicker results,” he said.
Meanwhile, the company is working to bring JW Powell into permanent production.
Some frack fluids are still flowing back and production rates will be actively monitored by Fremont and Schlumberger.
Oil is currently being collected for sale in temporary tanks.
Fremont is in advanced discussions with potential gas offtake partners to lock in bankable, long-term gas supply agreements for Pathfinder production.
Negotiations will be aided by the JW Powell’s high gas content, with gas monetisation and a near-term revenue channel a priority for the company.
“We are negotiating agreements which are more complex than first anticipated and we believe we are in the very enviable position where demand for Pathfinder’s gas is more significant than previously considered,” Mr Hart said.
“Securing the sales agreements to maximise shareholder returns needs careful consideration, but we are nearing the final stages and it will be worth the wait.”
At midday, shares in Fremont were up 13.33% to $0.017.