Stockton and Kubacak Lease Update for May 14, 2014
Stockton #2 and #3 Status Update
The Stockton #2 has been recompleted and is currently undergoing a fracing analysis.
Production on the Stockton #2 has fluctuated between 2 barrels of oil per day (BOPD) and 12 BOPD. While the production rates have varied, the well’s production has been consistent since being recompleted in late April, marking the recompletion a success. On average, the daily production cut has been approximately 5 BOPD and 12 barrels of water per day (BWPD).
John Bell, Treaty Energy’s field operations manager and petroleum engineer, has reviewed the relevant data and has suggested that the Stockton #2 well be allowed to produce for two-three more weeks to allow the well’s production to level off.
Initial reviews and analysis show that the well is a suitable candidate for fracing. Current geological data and production data indicates that by doing a heavy frac in the upper zones, oil production could be greatly increased to levels consistent with other producing wells in the area.
With the increased oil production, water production is also likely to increase based on the Company’s initial analysis of the fracing operation. Chris Tesarski, Treaty Energy’s new Executive Chairman, has a detailed background in well water disposal. Mr. Tesarski believes that the increased water production can be mitigated and should not cause an issue. In addition, Treaty Energy now has several available disposal wells to utilize based on the acquisition of Texas Sands Resources.
Before the Stockton #2 fracing occurs, the Stockton #3 will undergo a perforation and swab test. The lower Gray sands zone will be perforated and swabbed to allow Mr. Bell to gather information into the production potential of the lower zone. Once completed, a bridge plug will be set and the upper Gardner limestone zone will be perforated and swabbed. This process will provide vital production potential information at a lower cost to determine how/if the well should be completed.
Once Mr. Bell completes his testing of the Stockton #3 well, he will suggest a completion strategy for the Stockton #3 and present it to Treaty Energy’s management for review and approval. Furthermore, the swab test on the Stockton #3 will provide valuable information on the production potential of the upper zone on the Stockton #2.
The total estimated timeline for all of the above actions to occur is 2-3 months.
Kubacak Drill Site
Treaty Energy’s new management is reviewing the Kubacak lease project thoroughly. Earlier this year, the Company received word from the land owner that another company had acquired the rights to drill on the lease next to the Kubacak lease. Management opted to place the project on hold until the other company completed its operations on the adjacent lease.
Mr. Bell has been closely monitoring the production levels on the wells being drilled and completed near Treaty Energy’s potential drill sites. In addition, Mr. Bell has been gathering and reviewing existing geological information that has become available over the last couple of months to determine if the lease prospect is as viable as initially thought. A new drilling plan will be determined in the next few weeks to determine the correct way to proceed with regards to the Kubacak lease. Utilizing this strategy, the Company may have saved itself over one million dollars in exploratory drilling costs.
In addition, the new Treaty Energy’s new management team is requesting a full and complete audit of all information relating towards the Kubacak lease project. This audit will include everything from lease geology to borehole positions. Changes in the drilling plan may occur based on this audit.
Stockton #2 and #3 Status Update
The Stockton #2 has been recompleted and is currently undergoing a fracing analysis.
Production on the Stockton #2 has fluctuated between 2 barrels of oil per day (BOPD) and 12 BOPD. While the production rates have varied, the well’s production has been consistent since being recompleted in late April, marking the recompletion a success. On average, the daily production cut has been approximately 5 BOPD and 12 barrels of water per day (BWPD).
John Bell, Treaty Energy’s field operations manager and petroleum engineer, has reviewed the relevant data and has suggested that the Stockton #2 well be allowed to produce for two-three more weeks to allow the well’s production to level off.
Initial reviews and analysis show that the well is a suitable candidate for fracing. Current geological data and production data indicates that by doing a heavy frac in the upper zones, oil production could be greatly increased to levels consistent with other producing wells in the area.
With the increased oil production, water production is also likely to increase based on the Company’s initial analysis of the fracing operation. Chris Tesarski, Treaty Energy’s new Executive Chairman, has a detailed background in well water disposal. Mr. Tesarski believes that the increased water production can be mitigated and should not cause an issue. In addition, Treaty Energy now has several available disposal wells to utilize based on the acquisition of Texas Sands Resources.
Before the Stockton #2 fracing occurs, the Stockton #3 will undergo a perforation and swab test. The lower Gray sands zone will be perforated and swabbed to allow Mr. Bell to gather information into the production potential of the lower zone. Once completed, a bridge plug will be set and the upper Gardner limestone zone will be perforated and swabbed. This process will provide vital production potential information at a lower cost to determine how/if the well should be completed.
Once Mr. Bell completes his testing of the Stockton #3 well, he will suggest a completion strategy for the Stockton #3 and present it to Treaty Energy’s management for review and approval. Furthermore, the swab test on the Stockton #3 will provide valuable information on the production potential of the upper zone on the Stockton #2.
The total estimated timeline for all of the above actions to occur is 2-3 months.
Kubacak Drill Site
Treaty Energy’s new management is reviewing the Kubacak lease project thoroughly. Earlier this year, the Company received word from the land owner that another company had acquired the rights to drill on the lease next to the Kubacak lease. Management opted to place the project on hold until the other company completed its operations on the adjacent lease.
Mr. Bell has been closely monitoring the production levels on the wells being drilled and completed near Treaty Energy’s potential drill sites. In addition, Mr. Bell has been gathering and reviewing existing geological information that has become available over the last couple of months to determine if the lease prospect is as viable as initially thought. A new drilling plan will be determined in the next few weeks to determine the correct way to proceed with regards to the Kubacak lease. Utilizing this strategy, the Company may have saved itself over one million dollars in exploratory drilling costs.
In addition, the new Treaty Energy’s new management team is requesting a full and complete audit of all information relating towards the Kubacak lease project. This audit will include everything from lease geology to borehole positions. Changes in the drilling plan may occur based on this audit.
