1st Sep 2015 10:24
LONDON (Alliance News) - Northcote Energy Ltd shares rose on Tuesday after it said the Lutcher Moore 20 well in the US has managed to produce 340 barrels of oil equivalent over a 24-hour test period, more than the daily amount it will be allowed to produce.
Northcote shares were up 10% to 0.165 pence per share on Tuesday morning.
Northcote said the well on the Shoats Creek field in Louisiana, in which it has a 93% stake, produced 260 barrels of oil and 500,000 cubic feet of gas over a 24-hour test period, which equates to 340 barrels of oil equivalent per day.
However, the company said it has filed an application which would allow the well to produce up to 250 barrels of oil per day, slightly lower than the 260 barrels per day produced under the testing period.
Northcote will still be able to produce natural gas on top of the 250 barrels of oil per day under that application.
Managing Director Randall Connally said production peaked at a rate of 360 barrels of oil per day and 800,000 cubic feet of gas per day during the test period, equating to 500 barrels of oil per day.
"We believe the final test represents a long-term optimal production rate to balance daily production with maximisation of long-term recoverable reserves from the well bore," he said.
Connally added the Lutcher Moore well should pay back the USD813,750 Northcote invested in drilling it within 10 to 12 months based on an oil price of USD40 a barrel.
On Tuesday morning, Brent oil was trading at just under USD53 per barrel and WTI crude was trading at over USD48 per barrel.
The oil produced at the well will be immediately available for sale, and the gas will become available for sale once Northcote has tied this well into the local gas network. Northcote said it is having discussions with potential natural gas purchasers and intends to add necessary infrastructure to sell natural gas to third-party purchasers as part of its overall field development plan.
Northcote said it believes that the positive well results add two to three drill locations to its previously announced eight-well drilling inventory, and it intends to have an updated reserve report prepared for Shoats Creek and the Frio formation which it said it will announce to the market in due course.
By Joshua Warner; [email protected]; @JoshAlliance
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