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EnerJex Doubles Mississippian Oil Project Acreage

EnerJex Resources Inc. has doubled its acreage position in its Mississippian Oil Project from 2,840 gross (2,556 net) acres to 6,370 gross (5,267 net) acres near the company's operations in Woodson County, KS.

EnerJex said it earned the acreage after achieving certain development milestones related to the adjacent acreage. It expects to earn another 320 acres in the same area after achieving additional development milestones.

Included in the expansion is a 90% working interest in 1,200 acres adjacent to acreage that EnerJex developed in 2013, which is in the early stage of secondary recovery. EnerJex expects to drill approximately 100 oil wells on the new acreage, and management expects the expansion to contribute new proved reserves to the company's year-end reserve report.

Also included is a 70% working interest in 2,330 acres that are exploratory and have higher potential for oil production and reserves due to higher anticipated reservoir pressure. EnerJex said it participated in drilling two new wells on the acreage in December, "both of which appear to be successful and are in the process of being completed." The acreage is in an area that has been sparsely developed, though prolific wells were drilled nearby in the 1950s.

EnerJex's Mississippian Project produces about 200 b/d from vertical wells completed in the Mississippian formation at a depth of 1,700 feet. The company said it has drilled dozens of oil wells in the project and has drilled more than 40 secondary recovery water injection wells that are expected to increase reservoir pressure and oil production throughout 2014. The project is characterized by low production decline rates and has an estimated economic life of 50 years, EnerJex said.

In July, EnerJex agreed to acquire privately held Black Raven Energy Inc., a Denver-based company with more than 75,000 net acres leased in the Niobrara-Denver Julesburg (DJ) Basin (see Shale Daily, July 31, 2013). The combined enterprise would be a Midcontinent-focused independent oil and natural gas exploration and production company with a deep inventory of low-risk drilling opportunities and exposure to emerging unconventional oil resource plays through its sizeable acreage footprint in the DJ Basin, EnerJex said at the time.

Tuesday’s announcement "does not temper my enthusiasm for the company's recently completed merger," said EnerJex CEO Robert Watson Jr. "The first three re-entries at EnerJex's Adena Field asset in Colorado appear to have achieved a combined stabilized production rate of more than 30 b/d of oil, which is in line with management's expectations and higher than what is reflected in the company's reserve report. Additional re-entries are currently in progress, and the fourth well appears to be capable of producing at a higher rate than any of the first three."

San Antonio, TX-based EnerJex is a domestic onshore oil company that owns oil and gas leases covering approximately 100,000 acres in multiple prolific hydrocarbon basins located in Colorado, Kansas, Nebraska and Texas. The company's El Toro Project is in Atascosa and Frio counties in Texas, just south of San Antonio. EnerJex's Cherokee Project is in Miami and Franklin counties in eastern Kansas, where the company owned an average working interest of 85% in 10,295 acres at the end of 2012.

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