With its oil and natural gas wells in New Mexico, South Texas and Arkansas' Fayetteville plays exceeding expectations, Houston-based independent Edge Petroleum Corp. soon expects to have eight or nine rigs in operation -- a record for the company.
Edge, in an interim update on its year-to-date operations, said that since the beginning of the year, 27 wells have been spudded, and the number is expected to grow to 30-34 wells by the end of the second quarter. Edge has logged 17 wells so far this year with only two dry holes for an apparent success rate of 88%. Seven wells are currently drilling, five operated by Edge and two by others. Edge is currently producing 73 MMcfe/d, which does not include about 2-3 MMcfe of production that has either been shut in waiting on pipeline connections or has been curtailed because of pipeline capacity issues.
At the end of January, Edge closed the largest acquisition in its history, acquiring 123 Bcfe of proved reserves located along the Texas Gulf Coast.
"The integration of our January acquisition was more time and manpower-consuming than we had originally thought," said CEO John W. Elias. "However, we have made great strides in fulfilling our personnel requirements, accessing drilling rigs, completion units and the other necessary oilfield services. Our wells drilled to date in New Mexico and more particularly in our South Texas Vicksburg-Frio and Arkansas Fayetteville-Moorefield plays have exceeded expectations. In addition, our ongoing technical efforts in these plays continues to be very encouraging. As a result, we are accelerating our approved program and continue to be confident in our ability to achieve our planned level of drilling and production growth for 2007."
COO John O. Tugwell said that after Edge acquired the Flores-Bloomberg field in January, "we have begun a detailed petrophysical study and seismic remapping effort. We immediately mapped and successfully tested a deeper pay sand in our Kent #2 well, which came online producing in excess of 4.8 MMcfe/d. Based upon the first two wells and our ongoing field work, we recently decided to add a second rig to our program in this field and we are considering adding a third rig. This field produces from more than 12 separate intervals and provides numerous development and recompletion opportunities for us to pursue."
Edge has been able to "significantly reduce the cost of drilling these wells as compared to the previous operator in the field," Tugwell said. "Our recent dry hole costs have averaged about $1.3 million, which compares to $2.3 million in the past. In addition, our technical review has indicated there may be additional resource potential not previously anticipated, which we hope to test later this year."
Before the end of the month, Edge plans to spud its first well in the Chapman Ranch property in Nueces County in South Texas, in what is expected to be a continuous drilling program lasting through at least the end of 2007.
In the Fayetteville-Moorefield play, Edge has drilled and completed three operated wells in the gas shale section and is currently drilling a fourth operated well. Based upon the results of operations to date, Edge said it has committed to a second rig, which is expected to arrive shortly.
"Our successful efforts in forming new operated drilling units, coupled with the start of the development related to our initial well successes, have resulted in a planned expansion of our operated 2007 drilling program," Tugwell said of the Fayetteville-Moorefield play. "We currently plan to drill 13 to 17 operated wells in the play this year, up from the nine as originally planned in 2007.
"As part of this program, we plan to begin development of the Fayetteville shale with a horizontal well offsetting one of our existing Moorefield shale completions," he said. "In addition to our operated activity, we have participated in three nonoperated wells, which are producing, and six wells which have been spudded and are waiting on a larger rig to drill the horizontal sections. Additionally, the operator of these wells is reevaluating the merits of drilling horizontally in the Moorefield versus the Fayetteville shale section as the primary target."
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