Mr. Murray McCartney reports
CROWN POINT PROVIDES OPERATIONAL UPDATE -- TIERRA DEL FUEGO
Crown Point Energy Inc. is providing an operational update.
"Crown Point's priority during the second half of 2014 has been to build Crown Point's Tierra del Fuego production base through the successful completion of the 10-well program currently being drilled and through the fracture treatment program of four existing wells," said Murray McCartney, chief executive officer of Crown Point. "Two wells were placed on production last week: the newly drilled LF-1024 well and the recently fracked LFa-1003 well, with more wells scheduled to come on production over the next few weeks."
Drilling and fracking operations during the Argentine winter have been impacted by cold weather including rain alternating with snow. This has created difficult conditions to move equipment, and as a result, drilling and fracking operations have been slowed down or in some cases delayed.
Five of the eight wells in the planned Los Flamencos development drilling program have been cased as potential Springhill gas wells:
- LF-1008 has been drilled to a final total depth of 2,210 metres. This
well was logged and cased with an 11-metre gross Springhill sand
section, and has had an 85-ton frack. Operations to bring this well on
production are under way. The well is currently waiting on a swabbing
unit for cleanout.
- LF-1027 was drilled to a final total depth of 2,242 metres. This well was
logged and cased with a 16-metre gross Springhill sand section. A 90-ton
fracture treatment is planned for the Springhill sand formation in this
well as soon as the fracture string is reset.
- LF-1024 has been drilled to a total depth of 2,200 metres. This well was
logged and cased with a 13.5-metre gross Springhill sand section and has
had a 93-ton frack. The well was tied in on Oct. 7 and, since that
date, has produced at an average gross flow rate of 110,000 cubic metres per day of gas,
together with 5.8 cubic metres per day of oil and 3.2 cubic metres per day of water through a 12-millimetre choke at an average flowing wellhead pressure of 53 kilograms per square centimetre.
It is currently producing at substantially similar rates.
- LF-1028 reached a total depth of 2,100 metres and was logged showing a nine-metre gross Springhill sand section. Attempts to run production casing
to total depth and cement were unsuccessful due to poor hole conditions.
The well is currently suspended and will be abandoned at a later date.
- LFE-1002 has been drilled to a final total depth of 2,280 metres. This
well was logged and cased with a 10-metre gross Springhill sand section.
It will be completed as soon as the rig is released from the current
fracking operation.
Preparations to commence the drilling of two sequential exploration wells are in progress:
- SLx-1003, which spudded Oct. 21, is located near the southern San Luis
field on the Las Violetas concession, close to existing production
infrastructure. A successful well would create additional drilling
locations in the San Luis area.
- PQx-1001 is located on the Puesto Quince prospect. The Puesto Quince
well will test a large undrilled fault block mapped by 3-D seismic that
is potentially analogous to the nearby Las Flamencos and Los Patos
pools.
Fracture stimulation of three of the four-existing-well-fracture program has also been completed:
- LFa-1003 has a 6.5-metre perforated Springhill sand section, and a 52-ton
frack was conducted. Prior to the fracture stimulation program, this well
had been suspended since 2012 due to low flow rates. The well was placed
back into production on Oct. 1 and, since that date, has averaged
daily gross production of 16,000 cubic metres per day of gas, 0.9 cubic metre per day of oil and 0.1
cubic metre per day of water and is currently producing at a gross rate of 21,000 cubic metres per day
of natural gas plus 1.3 cubic metres per day of oil and 1.7 cubic metres per day of water through an
open choke, at a wellhead flowing pressure of 11.9 kilograms per square centimetre.
- LFE.x-1 had a 16-metre Springhill sand interval fracked with a 57-ton
frack. Prior to the fracture stimulation program, this well had been
suspended since 2009. The well is currently waiting on a swabbing unit
for a postfrack cleanout.
- LF-1013 had two four-metre Springhill sand intervals fracked with a 92-ton
frack treatment. Prior to the fracture stimulation program, this well
had remained suspended since being drilled in 2008. The well is
currently waiting on a swabbing unit for a postfrack cleanout.
- LAz.x-2 has a nine-metre Springhill sand section, which was fracked with a
93-ton frack. Prior to the fracture stimulation program, this well had
remained suspended since being completed in January, 1989. The well is
currently waiting on a swabbing unit for a postfrack cleanout.
Management expects that production additions from the drilling and fracture stimulation program in Tierra del Fuego will result in rising production volumes and field sales receipts through to the end of the year. The new production and stronger natural gas prices, coupled with the benefits of the new gas subsidy program, paid by the Argentine federal government on incremental production levels, are expected to have a positive impact on Crown Point's operating results.
The company believes market conditions will continue to have a positive impact on oil and natural gas prices as there is not sufficient hydrocarbon production in Argentina to meet the demand for energy consumption in the country. The company also expects to realize benefits from its approved participation in the new gas subsidy program. This new hydrocarbon subsidy program provides an incentive for producers to effectively earn higher gas prices for increases in natural gas production above base production levels.
We seek Safe Harbor.
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