Winchester Energy (ASX: WEL) has begun horizontal drilling in vertical well White Hat 39#1 in Texas’ Permian Basin, with managing director Neville Henry labelling it as a potential “genuine game-changer” for the company.
The horizontal well is targeting a series of fractures in the Ellenburger formation, which were identified from 3D seismic analysis. Good oil shows confirmed by wireline logs were observed in the Ellenburger formation while drilling the vertical well.
Lateral drilling of White Hat 39#1 has begun at the top of the Ellenburger formation at 6,708ft and will be directed 700ft to the north-west.
Winchester Energy anticipates the well will take about two weeks to drill followed by production testing.
“If successful in generating highly commercial oil production, the lateral drilling of White Hat 39#1 will be a genuine game-changer for the company,” Mr Henry said.
The company noted White Hat 39#1 is more than 1.5 miles west of the operational White Hat Ranch Ellenburger wells and has no evidence of reservoir depletion.
According to Winchester Energy’s chairman John Kopcheff, horizontal wells in the Permian Basin have produced “multiple rates compared to a vertical well”.
Mr Kopcheff said the company has “high expectations” this will occur with the White Hat 39#1.
Today’s announcement follows last year’s disappointing production testing of its first horizontal well which was drilled from the vertical 38#3ML well. The well ended up too close to an adjacent oil field and the horizontal leg hit a depleted oil reservoir.
However, with the new 39#1 horizontal well, Winchester Energy is confident it is drilling into a “virgin” reservoir pressure zone.
In addition to the White Hat 39#1, Winchester Energy has a working interest in four pre-existing wells across the Fry/Strawn and Ellenburger formations, which will undergo recompletions in the coming months.
“Winchester has formulated an intensive work program for the next three months, which will include the drilling and testing of one horizontal lateral in the Ellenburger in an existing vertical well, as well as four recompletions within proven oil-bearing sands overlying the Ellenburger and in the Ellenburger itself,” Mr Henry said.
“The lateral drilling and recompletion work program is very cost-effective given the vertical components of the wells have been drilled, meaning that all costs related to the forthcoming well activity will be covered by existing oil revenues, existing cash and contributions from farm-in partners.”
Mr Henry added in the upcoming months, Winchester Energy aimed to capitalise on the current buoyant oil market by doubling production and keeping costs down to boost its margins.