Magnum Energy Inc. Provides Operations Update
In Provost, Magnum fracture stimulated one of the producing vertical oil wells on June 1, 2011. The well's production rate was 5 bopd prior to the stimulation. After thirty days, the well is producing at a stable rate of 29 bopd (14.5 bopd net to Magnum). At the current rate of production the operation will reach payout in approximately three months.
Our joint venture partner is required to pay 100% of the costs to drill and complete to tie-in two horizontal wells to earn a 50% working interest in certain lands in the Provost area. The first horizontal well spudded on June 28, 2011. The well, targeting the Viking "A" formation, has been drilled to a depth of 800 meters with a 1200 meter horizontal leg which passes entirely through an oil bearing Viking sand. The horizontal leg is being prepared for a multi-stage fracture stimulation scheduled for July 24, 2011. Under the terms of the joint venture agreement, the second horizontal well must be spudded within 30 days of the completion of the first horizontal well.
Magnum was also successful at a recent land sale in the Provost Viking "A" Oil Pool, acquiring a 50% working interest in all petroleum and natural gas rights in a section that falls within the Viking oil halo Magnum has identified. The section includes two cased well bores that the Company will recomplete using a similar fracture stimulation that was successfully used on the first vertical operation described above. Magnum has identified a second light oil play on the section below the Viking zone which will be developed utilizing existing 3D seismic.
With the addition of the section acquired at the recent land sale, Magnum has identified a total of 4 existing vertical Viking oil wells that can be fracture stimulated adding production at a very economic rate.
In June 2011, Magnum fracture stimulated two wells and re-entered two wells to complete operations from previous work programs in the Sedalia area.
The two wells that have been successfully fracture stimulated are still in the clean up phase and may require further coil clean outs before the Company can announce stabilized production rates. Work to date on the re-entries has added over 100 boed. The Company still has production of approximately 40 boed behind pipe on other zones that will be comingled once the clean out phase has been completed on the wells that have been fracture stimulated.
In the past six weeks, Magnum has added approximately 120 boe/d of production with several operations yet to be completed.
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Magnum was also successful at a recent land sale in the Provost Viking "A" Oil Pool, acquiring a 50% working interest in all petroleum and natural gas rights in a section that falls within the Viking oil halo Magnum has identified.
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