Otto Energy Limited (ASX:OEL) has started work on build-out facilities to bring its Lightning Well into production in the Gulf Coast program in Matagorda County, Texas.
Operated by Hilcorp Energy, the Gulf Coast program is testing several geologically-independent prospects including Lightning Well and Don Julio 2, which are mainly amplitude-supported on modern 3D seismic.
With the Lightning discovery well having been perforated and a flow test undertaken, results show that the well will flow strongly with a condensate yield substantially exceeding Otto’s pre-drill estimates.
“Very excited about the progress”
Otto managing director Matthew Allen said: “Otto is very excited about the progress being made within the Gulf Coast program, having now tested three out of the eight prospects within the program, Otto is confident that we have already delivered value in excess of the planned costs of the entire program.
“Given these outcomes, we are very excited to test the remaining five prospects and our next well will test the Mustang prospect, which on pre-drill estimates represents the second largest prospect in the program.
“Otto has additional rights to the nearby follow-up Cosair and Hellcat prospects which will be further de-risked should we have success at Mustang."
Gas meets "sale specifications"
The Lightning Well was perforated over a 28-foot zone in the lowest intersected pay zone, being the Tex Miss 3 interval on March 7, 2019, and underwent initial flow back tests to determine flow rate calculations and liquid yields.
The test confirms that production from this zone is in line with nearby producing fields and indicates the gas meets the sales specifications for the Houston Ship Channel gas market.
Don Julio 2 was also drilled to a total depth of 11,900 feet measured depth / 11,799 feet total vertical depth.
“On track to become second production asset”
Allen added: “The well test on Lightning has confirmed the discovery as significantly exceeding our pre-drill estimates and is on track to become Otto’s second production asset in the area.
“With a liquid yield that also significantly exceeds pre-drill expectations, substantial additional value will be created from this already material discovery.
“There is also the potential in the future for additional wells to be added to the field once production is established and the field is fully evaluated.
“Otto is making excellent progress towards delivering our strategic objective of 5,000 barrels of oil per day of production by the end of 2020.”
The Lightning field will undergo a period of analysis once production commences to optimise a full field development and the company has also begun to develop maiden reserve volumes on the Lightning discovery and will provide information on the total expected recovery and value once completed.
The next well in the Gulf Coast program will test the Mustang prospect.