NORTHCOTE ENERGY LIMITED: Operations Update
Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector:
Oil & Gas 20 February 2013 Northcote Energy Ltd (`Northcote' or `the Company') Operations Update Northcote (AIM: NCT), the listed onshore US oil and gas exploration and production company, is pleased to provide a positive update on its operations in Oklahoma, where it produces from the proven Mississippi Lime and Layton formations. Update * Preparation for fracture stimulation programme on Horizon Project proceeding according to plan with the first frac expected to begin late February/early March 2013; * Acquired a 3.125% working interest in the Bird Creek Prospect in Osage County. The project comprises 800 gross acres and the drilling programme will initially target the Bartlesville Sand. Northcote expects to participate in two wells, the Bray #1 and the Keese #1 in the first half of 2013; * Elected to participate in the deepening of the Burkhart # 1 well on its Horizon Project acreage. This well, was originally drilled to and produced from the Mississippi Chat formation and will be further deepened to evaluate the Mississippi Lime, Wilcox and Arbuckle formations. Northcote has a 3.69% working interest in the well; * Busse and Bouziden wells in Woods County are in process of being tied in to gas sales lines and the Company expects to be able to announce initial production rates from both wells in due course.
Northcote's Chief Executive Officer Randy Connally said, "Northcote's Horizon Project assets currently produce from two pay zones and by participating in the Burkhart #1, we will gain exposure to additional zones. The presence of multiple pay zones in many areas of Oklahoma is one of the reasons the state has historically, and continues to be, one of the most prolific oil and gas producing states in the U.S. Exploiting the entire well bore to leverage existing investment and generate returns from other objectives, where economically justified, is a core part of our strategy to maximise returns and generate internal cash flow to help fund our higher impact Mississippian projects.
"Additionally, taking small interests in new prospects, as we have done in the Bird Creek Project, with an eye toward increasing our interest as the prospect is de-risked is an important part of our growth strategy. We plan to continue to participate in new wells, which are not part of our current lease and reserve base, when we have confidence that low cost incremental production has a high likelihood of success.
"At listing our net reserves were assigned a P1 PV10 of US$33.8 million by our competent person. Since then, having exercised the option to materially increase our average working interest in the Horizon Project, Osage County, this has increased and our participation in these new wells, alongside our fracture stimulation programme, provides us with confidence that we are on course to further increase our net production and net reserves by the end of the year."
Horizon Project, Osage County
Northcote has elected to participate in the deepening of the Burkhart # 1 well (`the Well') on the Horizon Project to evaluate the proven Mississippi Lime, Wilcox and Arbuckle formations. Originally, the Well was drilled to and produced from the Mississippi Chat formation. Northcote has a 3.69% working interest in the Well, and as a result drilling and completion costs are expected to approximate US$15,000 net to Northcote's working interest.
Preparation for the fracture stimulation on two existing horizontal wells on the Horizon Project is proceeding according to plan. The first frac is expected to commence in late February/ early March 2013. As part of its strategy to significantly increase production, Northcote intends to utilise hydraulic fracturing techniques in relation to the unfracked horizontal wells on the Project. Hydraulic fracturing is the primary choice for enhancing production, and typically has the effect of increasing productivity 2 to 30 times compared to an untreated well, by increasing the amount of contact that the well bore has with high quality reservoir rock. Northcote's average working interest in the 10 wells currently producing in the Horizon Project is 37.5%.
Bird Creek Project, Osage County
The Company has acquired a 3.125% working interest in the 800 gross acres, Bird Creek Prospect which has near term production potential. Northcote expects to participate in two wells, the Bray #1 and the Keese #1 in H1 2013. Both wells will initially be targeting the Bartlesville Sand formation. The combined cost of drilling both wells net to Northcote's working interest is estimated at US$30,000.
DeAgua Project, Woods County
The Busse and Bouziden wells in the DeAgua Project are in the process of being tied in to gas sales lines. Initial production rates for both wells are expected shortly.
For further information, visit www.northcoteenergy.com, or contact:
Randy Connally Northcote Energy Ltd +01 214 675 7579
Ross Warner Northcote Energy Ltd +44 7760 487 769
Dan Jorgensen Northcote Energy Ltd +44 (0) 20 7024 8395
Roland Cornish Beaumont Cornish Ltd +44 (0) 20 7628 3396
James Biddle Beaumont Cornish Ltd +44 (0) 20 7628 3396
Jerry Keen Shore Capital Stockbrokers +44 (0) 20 7408 4090
Bidhi Bhoma Shore Capital Stockbrokers +44 (0) 20 7408 4090
Hugo de Salis St Brides Media and Finance +44 (0) 20 7236 1177
Elisabeth Cowell St Brides Media and Finance +44 (0) 20 7236 1177
Northcote Energy Ltd is a revenue generative US onshore oil and gas production company focussed on the rapidly emerging Mississippi Lime formation in Oklahoma. The Company participates with leading operators, including Midstates Petroleum and Chesapeake Energy, in low risk development plays where advanced techniques, such as horizontal drilling and fracking, are used to unlock known oil accumulations and dramatically improve recovery rates. Management is focused on increasing production through a multi-well drilling and fracking campaign in 2013.
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