US-focused oil producer Winchester Energy (ASX: WEL) has commenced initial oil sales, as its newly fracked White Hat 20#3 well, part of the Mustang project in Texas’ Permian Basin, continues to pump low sulphur ‘sweet’ 48 degree API oil at a rate of 306 barrels per day.
Earlier in the month, the company announced fracking of the well, targeting the Strawn sand in the Mustang prospect, recovered 300bbls of fluid with a 10% oil cut after two days of swabbing.
Since then, the oil cut has steadily increased with Winchester today reporting the well producing on pump between 265-342bpd of fluid with an oil cut of about 90%.
Facilities have now been fully installed and oil sales have begun, the company said.
The flow rate is dictated by the current pump setting as Winchester assesses the optimal rate of production without adversely impacting the reservoir.
However, the company said previous pumping and swabbing results indicate the well is capable of greater flow rates.
The flow rate will be closely monitored over the next few weeks.
Meanwhile, an independent prospective resource review and plans for early step-out development wells are reportedly “well underway”, with a drilling program for the Mustang prospect expected to initially focus on well locations immediately offset to White Hat 20#3.
Winchester is also remapping the potential northern and southern extensions of the field to possibly include up to 15 additional well locations across the greater Mustang prospect stratigraphic trap.
“The success of the White Hat 20#3 and the exceptional flow rate of the well is an important development in that by utilising 3D data and analysis of old wells, we have established a new stratigraphic trap in a sand unit of the Strawn formation, the Mustang prospect,” Winchester managing director Neville Henry said.
He said with a development plan focused on “relatively low-risk” well locations initially stepping out from White Hat 20#3, Winchester is expecting to “steadily expand its oil production and cash flow”.
The El Dorado and Spitfire prospects, which are also scheduled for drilling this year, represents “more genuine upside for the company”, Mr Henry added.
The two prospects, together with Mustang, are believed to have a combined best to high estimate prospective resource of 7.8-17.5 million barrels of recoverable oil.