Permian Basin pure-player Lilis Energy Inc., citing an expected windfall in production and longer laterals during the fourth quarter, reaffirmed plans to exit 2018 producing at a rate of 8,000 boe/d and plans to resolve production curtailments in the near term.
In a production update Tuesday, the Houston-based company reported 3Q2018 production of 5,937 boe/d, a more than four-fold increase from the year-ago quarter (1,443 boe/d) and up 23.5% sequentially (4,805 boe/d).
But Lilis said curtailments primarily caused by third-party equipment upgrading and construction on critical trunk lines delayed connections for several wells, primarily in the company's eastern acreage in the Permian. Current production was reportedly averaging about 6,500-7,000 boe/d.
"It should be noted that our production was impacted solely by shut-ins and not the quality of our production and acreage, which continues to demonstrate to be among the best in the Permian's Delaware Basin," said CEO Ronald Ormand. "Management recognizes the significant impact these curtailments have had on production and has taken direct measures to minimize production delays going forward."
Lilis raised its year-end net production guidance in July to 8,000 boe/d from 7,500 boe/d.
Ormand said Lilis would continue running a two-rig drilling program through 2019 and would announce its budget and production guidance for 2019 before the end of the year. The company is scheduled to report 3Q2018 earnings on Nov. 1.
Lilis drilled and completed seven horizontal wells targeting the Wolfcamp A and B intervals, as well as the Second and Third Bone Spring formations. The company has drilled and completed 24 horizontal wells to date.
In an update of four wells in the Permian, the Moose 1H, which was Lilis' first 1.5-mile lateral well to target the Wolfcamp A, achieved a 24-hour initial production (IP) rate of 1,691 boe/d (72% liquids). The' second well to target the Second Bone Spring, AG Hill 2H, hit a 24-hour IP of 845 boe/d (77% liquids), while the second 1.5-mile lateral well in the Wolfcamp B, West Axis 1H, had a 24-hour IP of 1,571 boe/d (82% liquids). Prizehog 2H, the first Wolfcamp A drilled in New Mexico, registered a 24-hour IP of 1,825 boe/d (77% liquids).
The company also reported that its total proved reserves had increased to 46.7 million boe at the end of the third quarter, up from 11.5 million boe at the end of 2017, marking a 308% increase.