Grand Gulf Energy (ASX:GGE) has increased its oil and gas production with the Abita well in Louisiana cleaning up and producing 1 million cubic feet of gas and 5 barrels of oil per day.
The company has a 20% working interest in the Abita Project and will report again on this operation once stabilised rates have been achieved.
The gas and oil flow comes from the 17 sand, which is estimated to contain 485.4 million cubic feet of gas and 10,000 barrels of oil.
Following depletion of the 17 Sand the company can move to produce from the 15 Sand.
The 15 Sand is estimated to contain 1.5 billion cubic feet of gas and 30,500 barrels of condensate.
The recompletion that was undertaken on the 17 Sand was structured to enable an easier and cheaper recompletion on the 15 Sand.
Grand Gulf Energy recorded revenue of $1.4 million in the March 2015 Quarter on net production of 17,421 barrels of oil and 15.36 million cubic feet of gas.
In January, the company purchased a series of NYMEX WTI put options for 2,400 barrels per month at a strike price of US$49.20 per barrel over the period to June 2015 to mitigate downside price risk.
It also secured in March a series of NYMEX WTT put options for 3,600 barrels per month at a strike price of US$50 per barrel over the period July to December 2015.
The company has also secured leases over the Yellowfin Project in Assumption Parish, Louisiana.
This was developed in house using the company’s proprietary 52 square miles seismic survey and targets Cretaceous Tuscaloosa sands over a 2,000 foot interval on a structural closure covering an area of 8,000 acres.
Yellowfin follows Freeport McMoran’s “Highlander” Jeanerette #1 Discovery to establish sand, pay and significant column height and multi-TCF potential in the new trend.
Freeport’s discovery is reported to host 3 trillion cubic feet with 50,000+ acres under lease and two additional wells permitted in the area.
An initial test well will be drilled to a total depth of 27,900 feet.
While the Abita well continues to clean-up, the gross current flow of 1 million cubic feet of gas per day hints at its potential to provide a boost to the company’s oil and gas production.
This could in turn drive cash flow growth.
Grand Gulf Energy had $1.75 million in cash as of 31st March 2015. A payment of US$718,000 is also expected following a court ratifying a settlement.
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