US-focussed oil and gas producer Winchester Energy (ASX: WEL) is gearing up to begin testing El Dorado, Mustang and Spitfire prospects in early 2019, which the company believes are “compelling drill targets”.
The “exciting drill prospects” were reported in mid-October after 3D seismic and well control work identified them within Winchester’s 17,000 acre leaseholdings in Texas’ Permian Basin.
Winchester Energy anticipates the targets possess gross prospective resources of 7.8 million barrels of oil, with a high estimate up to 17 million bbl in the Strawn and Ellenburger oil formations.
The company will be keenly awaiting results from the Spitfire prospect as it anticipates proving up a major Strawn formation stratigraphic trap.
After an unsuccessful horizontal lateral well in the Ellenburger Formation, during the September quarter, Winchester refocused on moving up-hole to the shallower oil-bearing Strawn Formation, which revealed encouraging oil shows while drilling.
Testing of oil potential within the Strawn Formation is underway at the White Hat Ranch 39#1 well, with initial work producing 1,000bbl of oil over 10-days.
Winchester said the production rate was “significant” for an unfracked Strawn well.
As a result, the company is carrying out tests to assess the reservoir pressure as well as evaluating potential near well bore damage, area extent and possible formation barriers.
The company will use this data to determine whether the well will require fracture stimulation or a larger acid job to generate commercial flow rates.
Nolan and Coke Counties, where Winchester’s positioned, have produced more than 65 million bbl of oil from the Strawn Formation.
Meanwhile, well operator US Energy Corporation of America has re-entered the existing Thomas 119-H well and will test the unconventional oil potential in Wolfcamp D formation after it has evaluated the lower Strawn Formation.
If oil and gas is produced from Thomas, Winchester has the right to a 12.5% working interest back-in after recovery of well costs by US Energy Corporation.
A significant portion of Winchester’s current production comes from the Strawn Formation at its White Hat 20#2 well, which was fracture stimulated and has been producing for 17 months – generating 30,000bbl of oil to-date.
During the September quarter, Winchester netted oil production of 5,503bbl and its net oil sales for the period amounted to 5,098bbl.
To-date, Winchester’s Nolan County wells have given up a gross total of 305,711bbl of oil and 169 million cubic feet of gas.
Of that, Winchester’s share, before royalties, was 152,855bbl of oil and 84.5 million cubic feet of gas.
In mid-morning trade, shares in Winchester were steady at $0.026.