Winchester Energy gears up for White Hat exploration and development in Texas

Winchester Energy ASX WEL White Hat exploration development Texas
A rig has arrived at White Hat 39#1L ahead of a hydraulic fracturing program targeting the Strawn Formation scheduled for next week.

Permian Basin-focused oil and gas junior Winchester Energy (ASX: WEL) is gearing up for the launch of a hydraulic fracturing program in its White Hat Ranch oilfield in Texas, with a drilling rig arriving on site and operations due to begin next week.

The company today reported a workover rig has moved to the site of its White Hat 39#1L oil well, where recompletion work will target the shallower Strawn formation.

This formation is a proven producer in the oilfield, having produced more than 30,000 barrels of oil from the nearby White Hat 20#2 well after 17 months of production.

In addition, Winchester has a string of drilling and production testing programs lined up for the next six months across its Texan acreage, including the drilling of three new oil prospects within the White Hat Ranch field.

Upcoming schedule

Speaking at the 2018 Good Oil Conference in Perth earlier in the month, Winchester managing director Neville Henry outlined the company’s plans for the rest of the year and early 2019.

Along with commencing White Hat 39#1L’s fracture stimulation operations, recompletion activities are planned for the Thomas Ranch 119H well, targeting the Wolfcamp D shales. Both wells are expected to begin production testing in October.

Also in October, recompletions are planned for the White Hat Ranch 38#3 and Bridgford 40 wells.

Then from November 2018 to January 2019, vertical drilling is planned for three new prospects at the White Hat Ranch project. This drilling campaign will kick off at the El Dorado prospect, to be followed by the Strawn Channel, then Mustang.

According to Winchester, the Ellenburger formation alone has a large potential oil resource across an interpreted 40sq km area.

The prospects

The El Dorado prospect covers up to 1000 acres within the White Hat Ranch project and will target the Ellenburger formation and Strawn closure.

To the east of El Dorado is the Strawn Channel prospect, to be renamed the Spitfire Prospect with an interpreted gross area of up to 2000 acres.

The proposed location for drilling of the third prospect, Mustang, is further north-east from the Strawn Channel and closer to the previous drilled White Hat wells.

Mustang has an up to 1000-acre interpreted prospective area and will target the Fry, Strawn and Ellenburger formations.

According to Winchester, the Ellenburger formation alone has a large potential oil resource across an interpreted 40sq km area.

Drilling and production economics

Henry also explained the economics of the planned programs, pinning a low US$800,000 price tag on the vertical wells to be drilled, completed and on production.

Meanwhile, production costs have been estimated at US$8 per barrel, meaning the company expects to be profitable even at low oil prices.

According to Henry, there is also the potential for high initial production (IP) figures from the wells.

“Multiple vertical wells have had IPs of greater than 200 barrels of oil per day recovering over 100,000 barrels of oil,” he told conference attendees.

Winchester is hoping to be able to grow production, cash flow and reserves through successful recompletions of the White 39#1 and 38#3 wells and exploration success in the El Dorado, Strawn Channel and Mustang prospects.

The company then aims to fund an ongoing drilling program of 6-12 wells per year via free cash flow and farm-outs.

Winchester has already pinpointed 20 additional drill-ready locations with interpreted structural and stratigraphic traps in multiple stacked potential oil pay formations.

Danica has extensive experience writing and editing business news in the Oceanic and Southeast Asian regions. She has written across a range of industries including oil and gas, mining, energy, science and research, retail and travel. Danica has covered small and large cap companies listed on the Australian, Singapore, Hong Kong, Indian, London and Toronto exchanges.