Armada Oil, the Dallas-headquartered hydrocarbon E&P focused squarely on their cash flow positive oil and gas production footprint spanning assets in Oklahoma’s Mississippian Lime (lots of unconventional potential here with the Woodford Shale right below), the Casper/Niobrara in Wyoming (mixed bag of conventional and unconventional), and their conventional Gulf Coast assets, reported start of a sweeping production enhancement program today on their Louisiana fields in Plaquemines and Lafourche Parishes.
This program actually kicked off at the start of this month and is designed to substantially rework multiple active wellbores. Rigorous geological analysis and engineering evaluation of the Lake Hermitage Field has kicked up an array of choice drilling and sidetrack targets, seven or more of which are classified as proved undeveloped and hold multiple, fully stacked pay zones just waiting to be developed.
CEO of AOIL, Randy Griffin, spoke highly of recent analytical efforts made in the field and indicated to markets that these findings have really pushed the initiative level at AOIL for this production enhancement program over the top. Pledging to maintain current momentum and aggressively execute on the program, Griffin forecasted that increased production as a result of the program would clearly reaffirm and reinforce the foundation for AOIL’s expansion and new drilling aspirations in the area. The company is even keenly eyeing localized acquisitions and is sticking to their guns when it comes to the growth-oriented business philosophy set forth by AOIL’s veteran management team.
The plan here is to complete the necessary production capacity upgrades and completions into new zones, in concert with the wellbore reworking, such that a projected 20% increase is achieved in daily net production over the current 650 BOEPD. Armada has a nice variety of sandstone reservoirs to tap here in the roughly 3k to 14k foot range and with just under 3.6k mineral acres held by production in the Lake Hermitage Field (18 wells, 100% WI with a 75% NRI), already contented AOIL shareholders are no doubt licking their chops at a 20% output bump to this operation’s bottom line.
Striking a solid balance between necessary capital outlays and the eventuating cash flow increases, this program also falls well within the capacity of internal cash flow to fund, and so confidence is rather high at AOIL going into the program that both production and reserves will be grown heartily. Detailed, continuous analysis will proceed abreast of the program’s activities and the overall design/scope will likely respond accordingly.
This is a great companion development to the company’s holdings in the liquids-rich Niobrara Play (proximal to the Laramie and Hanna Basins in Wyoming). The developmental potential they have in Oklahoma is also something to keep an eye on. Investors can look forward to an update on the production enhancement program in Louisiana over the coming weeks and months as work progresses.
For more info, please visit www.ArmadaOil.us
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