Onshore natural gas company Sacgasco (ASX: SGC) is cheering commercial gas flows at its Dempsey project, which are expected to double the company’s operated gross production in California’s Sacramento Basin.
The company today announced its Dempsey 1-15 well has been flowing gas from the Kione sandstone interval at a commercial test rate of 1 million cubic feet per day.
According to Sacgasco managing director Gary Jeffery, this rate was “as expected and most pleasing”.
“It doubles Sacgasco’s operated gross natural gas production deliverability in the Sacramento Basin without factoring in production from Zone 2 and 3, and potentially Zone 4,” he said.
“The Dempsey 1-15 well has a large column of gas saturated rocks and we still have multiple options to further develop the well and the surrounding gas reservoirs which will be assessed while Dempsey delivers valuable and material cash flow from production,” Mr Jeffery added.
Sacgasco also reported preparations were underway to test the Zone 4 sands.
Once results from this zone are received, the company plans to combine the flows from all zones to report an aggregate flow rate. It also anticipated “very early” cash flow as the gas sales infrastructure is already connected to the Dempsey well.
Jeffery said increasing output and therefore, cash generation, was consistent with Sacgasco’s dual focus of growing production from its 27-well portfolio, along with the drilling of high impact development, appraisal and exploration wells such as Alvares, Dempsey and other “lookalike” prospects.
Sacgasco operates the Dempsey gas project with a 50% interest. UK-listed Empyrean Energy holds a 30% stake and other ASX-listed players Pancontinental Oil and Gas (ASX: PCL) and Xstate Resources (ASX: XST) each hold a 10% stake.
The company confirmed the project as a significant discovery in December and placed its Dempsey-1 well into production in January.
An enhanced reservoir stimulation program, designed to significantly improve the productivity of the well, began in March.
Sacgasco is focused on developing natural gas prospects in the Sacramento Basin to supply to the local Californian gas market as well as export LNG markets.
In addition to the producing Dempsey well, the company has an active well-work program in the Dempsey area and across its broader asset portfolio which it hopes will be “likely to further increase production in the near term”.
Sacgasco shares were up 10.4% to A$0.053 on the news by midday trade on Monday.