Range Energy Resources Inc. (CNSX:RGO) sole contractor of the Khalakan production-sharing contract in the Kurdistan region of Iraq, Gas Plus Khalakan (GPK), issued an operations update on Range’s Shewashan field.
The update specified:
- Oil production in 2016 and 2017: During 2016, the Shewashan field produced 877,000 barrels of oil, which was sold into the Kurdistan domestic market. GPK estimates 2017 total Shewashan field production of up to three million bbl.
- Shewashan-3 commences production: The Shewashan-3 well reached TD (1) of 2,874 metres MDBRT (2) in December, 2016, and was placed into production in late January, 2017, at a rate of 2,600 barrels per day with a 24-64ths-of-an-inch choke, very low drawdown and no produced water. However, the well has now started to pull formation water, and this is being investigated.
- Shewashan-4 drilling progress: The fourth Shewashan production well, Shewashan-4, was spudded in November with dual targets, including the existing productive zones in the Cretaceous and the unexplored and deeper Jurassic formations. Shewashan-4 is expected to reach TD in late March, 2017.
- Oil payments: In 2016, a total of $10.98-million in oil sales payments was received by GPK for oil sold through September, 2016. Oil sold from October, 2016, through December, 2016, was paid for in January, 2017, amounting to $4.57-million.
- Reserve report: GPK intends to engage DeGolyer and MacNaughton to update its June, 2015, reserve audit during first quarter 2017.
Range financial update
Based on the GPK operation update, Range will seek to raise capital to meet its near-term capital requirements of $2.6mln and to refinance its existing short-term loans of C$5.72mln. To meet the remaining capital requirements of the phase 1 field development plan, Range expects additional capital requirements of between approximately $4mln and $5.5mln depending on the amount of proceeds received from oil sales, oil production rate, the price per barrel of oil sold, drilling and operational expenses, and cash on hand, amongst others. Range anticipates that the phase 1 field development plan capex requirements will conclude in second quarter 2017.
"We are pleased with GPK's efforts to enhance the productivity of the Shewashan field and are delighted with the Shewashan-3 production rates. With three wells successfully drilled, it is still early in the fields development cycle, and as we learn more about the underlying reservoir geology, we look forward to additional news from the Shewashan-4 drilling results," said Toufic Chahine, chairman of Range.
The company is a 24.95% indirect shareholder of GPK through its ownership of 49.9% of the shares of New Age Alzarooni 2 Ltd. (NAAZ2). NAAZ2 owns 50% of the shares of GPK.