Enhanced Oil Resources Provides Operations Update
HOUSTON, July 16, 2013 /PRNewswire/ - Enhanced Oil Resources Inc. (TSX.V: EOR; OTCQX: EORIF) ("EOR" or the "Company") is pleased to provide the following update regarding the Company's operations results for the second quarter of 2013.
The Company's key business objectives for 2013 are to continue our focus towards increasing oil production and oil reserves at the Crossroads and Milnesand oil fields, to further evaluate the infill potential at the Chaveroo oil field, to further the permitting and potential construction of our Cortez to Milnesand pipeline connecting Kinder Morgan's Cortez CO2 pipeline to our Milnesand and Chaveroo oil fields by September 2015 and to continue our successful compliance activity across our oil fields.
Oil production during the second quarter of 2013 has averaged 403 barrels of oil per day (bopd). At the Company's Crossroads field, oil production has averaged 257 bopd during the second quarter. At the Milnesand field, oil production for the second quarter of 2013 has averaged approximately 88 bopd, similar to averages from last quarter. After ten months of oil production from the recently drilled MSU #141 and #522 wells, production continues at approximately 20 bopd, a slight decrease from the 22 bopd rates announced in May.
Crossroads production has averaged approximately 257 bopd with two wells currently shut in pending resolution of water handling issues. A work over rig is currently on location at the Crossroads #106 well and is preparing the well for conversion to a second water injector. We expect to have this work completed within the next week or so and expect to increase our water handling volumes shortly thereafter. As previously disclosed, two wells are currently shut in pending additional water handling capacity. It is anticipated that these shut in wells could add another 100 bopd to our production levels.
The twelve square mile, three-dimensional seismic survey, planned for Crossroads field has been acquired and interpretation of that data is ongoing. The seismic survey is intended to delineate potential infill locations at the Crossroads field, improve structural mapping and fault locations and contribute to the further evaluation of shallow production previously encountered in the field.
After approximately ten months of production from our recently drilled MSU #141 and #522 lateral wells, we continue to see a consistent production trend. Based on current rates of production we expect to end the initial twelve month production period at approximately 18 bopd per well, which is within our pre-drill expectations and considerably higher than the original vertical wells drilled to develop the field over forty years ago. We continue to monitor well and service costs to refine the economics of this play and confirm the need for the future utilization of lateral well bores in the upcoming CO2 development project.
The advanced petrophysical analysis within the Milnesand field, discussed in our May update, has been completed and information collected from this study is now being incorporated into our ongoing engineering studies to assess and identify potential waterflood optimization opportunities that can be executed in 2013/2014 prior to the implementation of CO2 flood operations. This work will involve such activities as pattern-by-pattern cross section alignment opportunities, injection rate adjustments, and pump upgrades.
In depth engineering studies regarding lateral application within the Milnesand field are expected to be completed by the beginning of the fourth quarter 2013.
Cortez to Milnesand CO2 Pipeline Update
The Company recently completed survey efforts on the proposed CO2 pipeline connecting Kinder Morgan's Cortez line to the Company's Milnesand and Chaveroo oil fields. Final survey results indicate a revised pipeline length of approximately 38 miles. Updated cost estimates suggest that the pipeline can be constructed for approximately $18mm, assuming current steel prices. The Company will proceed with the necessary federal and state permitting work in 2013 and expects to begin purchasing rights of way in 2014. Delivery of CO2 to the Company's proposed pipeline is scheduled to commence no later than September 2015.
Testing of the P3 interval was completed in two wells located within the Jennifer unit of the Chaveroo field. The zones were perforated and acid stimulated, followed by swab testing. P3 production results were below expectations and the Company has moved the recompletion effort to focus on re-stimulation of the P1/P2 intervals using state of the art fracturing technology. We anticipate moving forward with the first re-fracturing in the third quarter 2013.
Agreed Compliance Order (ACO)
In June 2013, the Company received approvals from the New Mexico Oil Conservation Division for the next six month compliance period. Pursuant to that order, the Company has obtained approval to drill three lateral wells and convert a number of existing production wells in the Milnesand field to injectors. These conversions will support the Company's upcoming CO2 development project. In addition, a number of wells in Milnesand are being reactivated during this six month period and the MSU #311 well has been plugged in accordance with the ACO.
The Company is pleased to report that, as of July 1, 2013, Mark Peavy has been promoted to the newly created position of Chief Operating Officer (COO) and is now responsible for all production and development activity within the Company.
Mr. Barry Lasker states "I would like to congratulate Mark on a job well done since joining EOR earlier this year. The promotion to COO is testimony to his hard work and experience. I am looking forward to working with Mark in this capacity as we grow our production and reserves. It is also pleasing that we have a rig on location to convert the Crossroads #106 well to our second water disposal well. The completion of this workover will enable further production growth at Crossroads by reentering additional wells and targeting other zones within our leases.
The Company continues the process of implementing our Milnesand CO2 flood by September 2015. We are continuing with sub surface evaluation and surface facility designs and expect to have these studies completed later this year. Our oil production is holding steady and we expect further increases in daily oil production will continue once our second water injector at Crossroads is on line."
About Enhanced Oil Resources Inc.
Enhanced Oil Resources Inc. (TSX.V: EOR; OTCQX: EORIF) trades in Canada on the TSX Venture Exchange under the symbol "EOR" and is quoted in the United States on OTCQX under the symbol "EORIF". Enhanced Oil Resources Inc. is an early-stage company, with a principal goal of increasing crude oil and natural gas production through enhanced oil recovery ("EOR") and infill drilling projects it is initiating in the Permian Basin.
Certain statements contained herein are "forward-looking statements" and "forward-looking information" under applicable securities laws, including statements regarding beliefs, plans, expectations or intentions regarding the future relating to Enhanced Oil Resources Inc.'s operations, business prospects, expansion plans and strategies.
Forward-looking information typically contains statements with words such as "intends", "anticipate", "estimate", "expect", "potential", "could", "plan", "continue", "scheduled" or similar words suggesting future outcomes. Readers are cautioned not to place undue reliance on forward-looking statements because it is possible that expectations, predictions, forecasts, projections and other forms of forward-looking information will not be achieved. Forward-looking statements are based on the opinion and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Although Enhanced Oil Resources believes that the expectations reflected in such forward-looking statements are reasonable, Enhanced Oil Resources can give no assurance that such expectations will prove to be correct, that our water injection limitations at Crossroads will be resolved, that the lateral wells will be drilled as expected or result in commercial production or that current oil production will continue or increase as expected or indicated. Further, there can be no assurance that the Company will commence or complete the construction of a connecting pipeline for the transmission of CO2 as contemplated, or within the timeline required under its current CO2 contracts or be able to justify the related economics of the project or complete it in the timeframes discussed or currently contemplated. Readers should refer to Enhanced Oil Resources' current filings, which are available at www.sedar.com, for a detailed discussion of these factors, risks and uncertainties. The forward-looking statements or information contained in this news release are made as of the date hereof and Enhanced Oil Resources undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable laws or regulatory policies.
ON BEHALF OF THE BOARD OF DIRECTORS
Barry D Lasker, CEO
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
SOURCE Enhanced Oil Resources Inc.