Canadian oil company Junex says their new horizontal well is commercial, even at today’s oil prices
Quebec oil and gas company Junex (ticker: JNX) announced earlier this week that it plans to restart production of its Galt No. 4 horizontal well in the Gaspe Peninsula in Quebec, Canada, following rapid pressure build-up after the company shut in the well.
The Galt No. 4 well is the first horizontal oil well in Quebec, according to Junex President and CEO Peter Dorrins. The well produced at a steady rate of 161 BOPD of light, sweet crude during the final six days of its 14 day production test for a total volume of 2,017 barrels. The vertical wellbore was drilled to a total measured depth of 2,400 meters, of which 1,503 meters are within the oil reservoir.
“To the best of our knowledge, this production rate of 161 barrels of oil per day is the highest oil production rate seen so far in Quebec and, based on our calculations, translates into a commercial oil production rate even at today’s oil price,” said Dorrins.
The company release notes that the production rate was limited by the configuration of the surface pumping equipment at the well, and the company is aiming to produce at an even higher rate once it starts pumping again.
The company initially planned on shutting in the well for 12 weeks to monitor pressure build-up, but the rapid build-up exceeded expectations. “This has stimulated us to significantly modify our production testing program,” said Dorrins. JNX plans to pump from the Galt No. 4 well for a month and a half before shutting in the well again over the period of spring break-up to record the pressure build-up on the downhole gauges already in the well.
Junex holds a 70% interest in the Galt Oil Property, with Junex’s partner, Mr. Bernard Lemaire, holding the remaining 30% interest. Junex holds 100% interest in the adjacent acreage, which has not yet been independently evaluated for its resource potential.
According to Netherland, Sewell & Associates, Inc. (NSAI), an independent reservoir engineering firm, Junex’s net share of the total recoverable oil resources volume on its Galt property in the Gaspe Peninsula is 20 MMBO. The company also holds unrisked, potentially recoverable natural gas resources of 3.5 Tcf in its Utica Shale licenses, according to NSAI.
As of June 30, 2014, the company had a working capital of $11.6 million, with no debt on the balance sheet, according to JNX. Its current market capitalization is US$51.6 million
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