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Westmont to Reopen Orphaned Oil Wells

Westmont Resources Inc. said Thursday it has purchased 3,400 total leasehold acres and 120 existing oil wells in the Marcellus Shale, part of the company's goal to produce more than 3,500 bbl of oil per month by the end of 2011.

Bellevue, WA-based Westmont said the leasehold -- which spans southwest Pennsylvania and northwest West Virginia -- contains 11 operational wells currently producing 0.6-0.9 b/d of oil per well, with total production averaging 7.7 b/d. The company said gross revenue from the 11 wells totaled $23,331 for the 231 bbl of oil produced in April.

Westmont CEO Bruce Fischer told NGI's Shale Daily on Thursday that the company purchased the leasehold from AFDA Limited LLC, a lease consolidation firm based in the United Kingdom. He said the wells on the leasehold were drilled from the 1940s through the 1960s, to depths of 200-250 feet.

"We're going to reopen these orphaned wells and get them back into production," Fischer said. "We have a technology that will come along in about four or five months that can increase yields on orphaned wells pretty significantly by repressurizing the formation. We're looking to get the basic wells reopened and pumping again."

Fischer said the company plans to put another 33 oil wells into production by the end of May, which could generate gross revenues of more than $105,000 per month. He added that Westmont currently has leasehold in Pennsylvania (60 wells), West Virginia (60 wells) and Tennessee (92 wells). The company said it anticipates having 170 of the 212 wells eventually earning gross revenues of $321,300 per month, based on oil prices in excess of $90/bbl.

"From what we're hearing from the operator in Tennessee, we do not believe that some of the wells in Tennessee will actually produce," Fischer said. "We would anticipate maybe 70 of the 92 actually being productive."

Fischer said the company is using four operators on the newly acquired orphaned oil wells and plans to clean them out and install new equipment, pumps and tanks where necessary. He said Westmont would redrill the oil wells in Tennessee into the Chattanooga Shale play, while the oil wells in Pennsylvania and West Virginia would tap into the Marcellus Shale after the geology in those states is tested.

Fischer said the company may focus on the production of Marcellus Shale gas in the future.

"Our primary focus initially is the oil aspects of these wells, and the technology that we would apply is directed to the oil, not natural gas," Fischer said. "Natural gas prices are a little low right now for heavy production, so we're focused right now on just getting the oil out of the ground. When the price of natural gas is at a higher level we will tap into the Marcellus Shale [for gas]."

Fischer said the company plans to increase production six-fold, to more than 5 b/d of oil per well. Westmont said if the project was successful gross revenue would total more than $2.29 million per month.

Westmont purchased 233 net acres of leasehold in Westmoreland County, PA, in February. That leasehold contained eight wells producing about 280 Mcf/d of natural gas.

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