OPERATIONS | Utah
Gasco’s 2009 preliminary capital expenditure budget is set at $10 million. The 2009 program includes completing the Gate Canyon State #23-16, the drilling and completion of approximately two gross (0.84 net) wells and 12 recompletions (4 net) of up-hole zones on Gasco's Riverbend Project located in the Uinta Basin of Utah. The wells in the program are focused on developing the natural-gas-bearing upper Mancos shale intervals and associated up-hole pay zones in each wellbore. The CAPEX budget does not include possible acquisitions, but may include installation of pipeline infrastructure, distribution facilities and certain geophysical operations.
The Company intends to fund its budget entirely through cash flow from operations. Consequently, the Company will monitor spending and cash flow throughout the year and may accelerate or delay investment depending on commodity prices and cash flow expectations.
At December 31, 2008, the Company owned or controlled approximately 123,568 gross acres, or 83,915 acres net its interest. Riverbend is a statistical play yielding predictable reserve adds marked by low geologic risk. The key to the project is in leveraging proven drilling and completion technologies, in particular stage fracing techniques, to best recover the gas in place.
Historically, Gasco’s engineering and geologic efforts focused on three tight-sand formations in the Uinta basin: the Wasatch, Mesaverde and Blackhawk formations. A typical well drilled into these formations may encounter multiple, distinct natural gas sands located between approximately 6,000 and 13,000 feet in depth that are completed using up to 10 staged fracture stimulations. During 2006 and into 2007, increased industry activity to the deeper Mancos shale began to occur. Initial results derived from public data are encouraging.
During the second quarter of 2007, Gasco spudded its first Mancos Shale test well and, based on early success here, continues to actively target the Mancos shale in its current drilling program. A key internal driver at Gasco is to continue reducing drilling days improving operational factors within our control to improve well economics. The current target is 20 to 25 days to drill from below surface casing to the Upper Mancos interval between 13,000 feet and 15,000 feet. The fastest Mancos well was drilled to 14,250 feet in 16 days. Our current plan is for all wells in the Riverbend Project to be drilled to the Upper Mancos.
An added benefit to overall per-well economics is the addition of up-hole payzones that can be comingled as reservoir pressure allows. A Mancos shale well can later be recompleted to capture behind pipe pay in the Wasatch, Mesaverde and Blackhawk formations. Gasco is currently working to complete the Upper Mancos and Blackhawk zones in the same frac job mobilization. This could result in improved initial production rates and provide flush production to improve early cash flow from each well.
At December 31, 2008. Gasco operated 125 gross producers in the Riverbend Project and had an inventory of 30 operated wells awaiting uphole completions. |
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