US-focused oil and gas player Winchester Energy (ASX: WEL) has announced a significant upgrade to its East Permian Basin oil reserves and resources following a recent independent estimate.
The onshore explorer and producer today revealed its net interest share of a 17,560-acre lease holding in Texas has been estimated to hold a combined 11.2 million barrels of oil equivalent in reserves and resources as at the end of 2019.
The estimate comprises 3P (proved, probable and possible) reserves of 1.65MMboe, 2C (best estimate) contingent resources of 6.72MMboe and P50 (best estimate) prospective resources of 2.82MMBoe.
The announcement marks a significant milestone for the company, booking oil reserves and contingent resources for the first time, as well as a 49% increase in previously announced resources.
Estimate boosted by 2019 exploration success
The news follows a busy 2019, during which the Lightning oil discovery was made, and further exploration success was achieved at the Mustang field.
By the end of the year, quarterly net oil production had grown by 40% to an average daily rate of 312 barrels per day and net oil and gas revenue had increased by 50% to US$1.23 million.
The reports were commissioned by Winchester and conducted by Texas-based independent consultancy Mire & Associates Inc.
The estimate is based on assessed resources and reserves as at 31 December 2019, which means it would not take into account recently announced oil production from Winchester’s White Hat 20#6 well in the Mustang field.
Winchester managing director Neville Henry described the updated estimate as a “significant development” for the company.
“With operational and overhead costs reduced, the updated reserves and resources estimate confirms Winchester as providing excellent exposure to any recovery in oil prices,” he said.
Winchester owns and operates the White Hat, Arledge, McLeod, Bridgford and Thomas leases in Texas’ Nolan County with working interests ranging between 50-100%.
The gross reserves and resources of the acreage have been estimated at a combined 16.19MMboe, comprising gross 3P reserves of 2.43MMboe, gross 2C resources of 9.46MMboe and gross P50 resources of 4.3MMboe.
The assessment of proved, probable and possible reserves was based on 10 actively producing wells, two wells being drilled and three planned new wells.