Winchester Energy recovers more oil from Lightning frack

Onshore oil producer Winchester Energy (ASX: WEL) has announced the recovery of “significant” oil from its Arledge 16#2 well on the Lightning prospect in Texas after fracking two Lower Cisco sand intervals.

The US-focused company started drilling the well at its Permian Basin acreage in July.

Within a week, it had reported “good” oil and gas shows over two intervals in the Lower Cisco sands and “good to strong” shows in the Upper Cisco sand.

Wireline logs confirmed 25ft of calculated net pay in the upper and 20ft in the lower Cisco sands.

Winchester began testing and completion of the lower sands in August, with the bottom two intervals (from a depth of 5,075-5,131ft) returning a combined swabbing rate of about 80 barrels of oil per day.

These two intervals were then fracture stimulated and swabbed again, with Winchester today reporting the well initially flowing through a wide-open choke at a rate of 30bbls of fluid per hour with a 90% oil cut.

To avoid damage to the reservoir, the well was then placed on a small quarter-inch choke, after which it flowed 103bbls of oil in 20 hours – equivalent to 125bopd.

Winchester managing director Neville Henry described this initial frack result as “extremely encouraging, with large implications for the company should the well continue to perform as per initial observations”.

The company also reported the flow of some gas, although this is so far unmeasured.

Future work

Winchester said following the analysis of data generated to-date, the next step would be to consider the completion of the next two lower Cisco sand intervals from 5,010-5,065ft.

These upper intervals are interpreted from wireline logging to contain more sand than the bottom two fracked intervals.

In particular, interval 4 (from 5,010-5,033ft) is a highly prospective sand with conventional reservoir properties, according to Winchester.

As for the upper Cisco sands, the company said its net oil pay and oil production potential will be assessed by a program of selective perforations, acidisation and stimulation to determine its potential for completion, as well as its potential production comingling with the lower sands.

“Seismic has identified a series of large shelf slope Cisco sand wedges of thick laminated and channelised slope fan complexes covering over 5,000 acres confirmed by drilling,” Mr Henry said.

“This is particularly exciting given the total pay interval of potentially 490 feet in the two Cisco sand units,” he added.

New chairman and board changes

Last week, Winchester announced some changes to its board, including the appointment of Laurence Roe as the new non-executive chairman and Tong Peng as a non-executive director.

Mr Roe is an experienced oil and gas professional who has had substantial involvement in Texas’ Permian Basin. He was the founding managing director of Target Energy (ASX: TEX) in 2006 and held the position until his resignation in February this year.

Mr Peng, a Houston-based banking and finance professional, is currently the chief financial officer of oil and gas exploration company Helios Energy (ASX: HE8).

The announced appointments came a day after Winchester released a notice of general meeting to the ASX seeking shareholder approval of Helios buying $500,000 worth of shares (20 million shares at $0.025 each) in the company.

This would boost Helios’ stake in Winchester to 5.45%, making it a substantial shareholder.

The general meeting has been scheduled for 3 October.

By midday trade, Winchester shares were up 28.89% on today’s news at $0.058.