Contango Updates Southern Delaware Basin Operations and Impact of Hurricane Harvey
September 18 2017 - 10:30AM
Contango Oil & Gas Company (NYSE MKT:MCF) (“Contango”)
announced today an update on its Pecos County, Texas operations,
including results on the Gunner #2H, its fourth well drilled on its
Southern Delaware Basin acreage.
Gunner
The Gunner #2H well (50%WI, 37.5%NRI) was
drilled to a TMD of 20,430 feet, including a 10,600 foot lateral
into the Lower Wolfcamp A. The well was completed with 50
stages of fracture stimulation in June, with initial flowback
commencing in early August. The well reached a gross maximum
3-stream 24-hour IP rate of 1,348 Boed (77% oil), and the last 30
days have averaged 1,152 Boed (76% oil), which represents our best
performance to date.
We have now tested multiple landing points
within the Wolfcamp A bench and believe we have proven at least two
benches for development within the Wolfcamp A across our acreage
position. The Rude Ram and Gunner landing points are spaced with
approximately 130’ of vertical separation from an Upper Wolfcamp A
and a lower Wolfcamp A landing, respectively. Each well we have
drilled has shown progressively better production performance than
the previous due to enhancements to completion and flowback
techniques. Our last two wells, the Rude Ram, which has produced
100 Mboe in 4 months and the Gunner, have been our best wells to
date. We will continue to evaluate and enhance our leasehold
with future drilling into the Bone Springs and the Wolfcamp B zone.
We remain very optimistic about these future benches in light of
recent activity around our position.
Crusader
The Crusader #1H well (40%WI, 30.3%NRI) was spud
in June 2017 targeting the Lower Wolfcamp A. The well was
drilled to a TMD of 20,275, including a 10,184 lateral. Completion
operations with 50 stages of fracture stimulation are expected to
commence in early January, as it and the Fighting Ace #3H will be
zipper-fraced from the same pad.
Fighting Ace
The Fighting Ace #1H well (50%WI) was spud
in June 2017 targeting the Upper Wolfcamp A. The well
was drilled on the same pad as the Crusader #1H, approximately 40
feet away. While drilling the lateral at a measured depth of
approximately 14,416 feet, we encountered mechanical difficulties
and temporarily abandoned the well; but we expect this well bore on
the Crusader pad could have future utility for a possible shallower
Bone Springs test. Upon completion of the drilling of the Ragin
Bull well, our current plans are to move the rig to the Fighting
Ace #3H location targeting the Wolfcamp.
Ragin Bull
The Ragin Bull #1H (47.3%WI), about two miles to
the northwest of the Fighting Ace location, was spud on September
12th and will target the Wolfcamp formation to satisfy lease
considerations. This well will also include an approximate 10,000
foot lateral with 50 stages of fracture stimulation.
Completion operations on the Ragin Bull are expected to commence
upon the completion of drilling operations in mid-November.
Hurricane Harvey Impact on Production
As a result of the extreme weather and flooding
caused by Hurricane Harvey, certain of our wells were temporarily
shut-in for precautionary reasons, due to limited access or because
of shut-ins by our purchasers due to the shutdown of refineries
along the Texas Gulf Coast. All production has resumed at normal
levels and the effect on our third quarter production is estimated
at approximately 1.3 Mmcfe per day for the
quarter.
Contango Oil & Gas Company is a Houston,
Texas based, independent energy company engaged in the acquisition,
exploration, development, exploitation and production of crude oil
and natural gas offshore in the shallow waters of the Gulf of
Mexico and in the onshore Texas and Rocky Mountain regions of the
United States. Additional information is available on the Company's
website at http://contango.com.
This press release contains forward-looking
statements regarding Contango that are intended to be covered by
the safe harbor "forward-looking statements" provided by the
Private Securities Litigation Reform Act of 1995, based on
Contango’s current expectations and includes statements regarding
acquisitions and divestitures, estimates of future production,
future results of operations, quality and nature of the asset base,
the assumptions upon which estimates are based and other
expectations, beliefs, plans, objectives, assumptions, strategies
or statements about future events or performance (often, but not
always, using words such as "expects", “projects”, "anticipates",
"plans", "estimates", "potential", "possible", "probable", or
"intends", or stating that certain actions, events or results
"may", "will", "should", or "could" be taken, occur or be
achieved). Statements concerning oil and gas reserves also may be
deemed to be forward looking statements in that they reflect
estimates based on certain assumptions that the resources involved
can be economically exploited. Forward-looking statements are based
on current expectations, estimates and projections that involve a
number of risks and uncertainties, which could cause actual results
to differ materially from those, reflected in the statements. These
risks include, but are not limited to: the risks of the oil and gas
industry (for example, operational risks in exploring for,
developing and producing crude oil and natural gas; risks and
uncertainties involving geology of oil and gas deposits; the
uncertainty of reserve estimates; the uncertainty of estimates and
projections relating to future production, costs and expenses;
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures; health, safety and
environmental risks and risks related to weather such as hurricanes
and other natural disasters); uncertainties as to the availability
and cost of financing; fluctuations in oil and gas prices; risks
associated with derivative positions; inability to realize expected
value from acquisitions, inability of our management team to
execute its plans to meet its goals, shortages of drilling
equipment, oil field personnel and services, unavailability of
gathering systems, pipelines and processing facilities and the
possibility that government policies may change or governmental
approvals may be delayed or withheld. Additional information on
these and other factors which could affect Contango’s operations or
financial results are included in Contango’s other reports on file
with the Securities and Exchange Commission. Investors are
cautioned that any forward-looking statements are not guarantees of
future performance and actual results or developments may differ
materially from the projections in the forward-looking statements.
Forward-looking statements are based on the estimates and opinions
of management at the time the statements are made. Contango does
not assume any obligation to update forward-looking statements
should circumstances or management's estimates or opinions change.
Initial production rates are subject to decline over time and
should not be regarded as reflective of sustained production
levels.
Contact:Contango Oil & Gas CompanyE. Joseph
Grady – 713-236-7400
Senior Vice President and Chief Financial
Officer
Sergio Castro – 713-236-7400Vice President and Treasurer
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