IFR scores approval for Tecolutla evaluation plan; next step–drilling permits
Clagary-based International Frontier Resources (ticker: IFR) announced Friday that the company received approval from the National Hydrocarbons Commission (CNH) for its evaluation plan of Block 24 Tecolutla. IFR’s joint venture Tonalli Energia acquired Tecolutla in Round 1.3 of the Mexican energy reform process. The evaluation plan outlines the scheduled work program to develop the block, International Frontier Resources said in a press release.
“After many months of effort by our Mexican and Canadian team, we are pleased to achieve this major milestone,” said Steve Hanson, president and CEO of IFR. “We now await final approval of our drilling permit and have a clear path to spudding our first well and performing workovers.”
“Our internal technical evaluation continues to confirm our original assessments that Tecolutla has the potential to be a highly economic project at current commodity prices,” IFR said following its Q4 and year-end results in April. “Tonalli believes that improved drilling technology and production techniques will enable it to increase the recovery factor of its Tecolutla asset.”
IFR’s Mexico ops funded through 2017
In March, International Frontier Resources announced that it closed a private placement for gross proceeds of C$5.1 million which will fully fund its operations in Mexico this year.
The brokered portion of the private placement consisted of 8.1 million shares for gross proceeds of C$2.3 million, while the non-brokered piece of the deal consisted of 10.0 million shares for gross proceeds of C$2.8 million, according to International Frontier Resources.
“We have received significant interest from institutional and high net worth investors as well as strong support from our shareholders,” said Hanson. “IFR is now fully funded to meet its 2017 work commitments at Tecolutla. We look forward to advancing the development on the block and putting Tecolutla into production with workovers and new wells planned to be drilled this year.”
Tonalli Energia is focused on wellhead servicing in preparations for workovers, according to an April release. The company plans to commence drilling operations in the third quarter, subject to regulatory approvals.
The country of Mexico is on a roll retooling its energy sector, with numerous lease blocks awarded in recent rounds. IFR was an early entrant into the country’s energy renaissance and submitted the winning bid for Block 24 Tecolutla in the country’s onshore auction in Round 1.3.
The Tecolutla Block is a 7.2 km2 block in the Tampico-Misantla Basin located within the state of Veracruz.
The producing carbonate oil reservoir in the Tecolutla Block is the El Abra formation at a depth of 2,340 meters (7,677 feet). IFR said 3D seismic has been acquired over the entire block and 7 existing vertical wells have been drilled by Pemex to bring the field into production. Cumulative production on a well by well basis from four key vertical wells has been 316,000, 507,000, 267,000, and 352,000 barrels each to date.
Like many oil and gas fields in Mexico International Frontier’s technical team believes oil production from Tecolutla has not been optimized. The team has re-evaluated the field using existing well control and 3D seismic and believe that horizontal drilling and workovers will yield daily production results that exceed the historical peak production of 900 barrels per day and significantly increase recoverable reserves.
IFR said to execute the plan its team intends to deploy advanced carbonate drilling, completion, stimulation and recompletion techniques in the block.
