Current PQ Stock Info

Looking to replicate Texas Austin Chalk results

Lafayette, Louisiana-based PetroQuest Energy (ticker: PQ) announced its entry into an oil focused play in central Louisiana today, targeting the Austin Chalk.

PetroQuest will acquire interests in 24,600 gross acres, for a purchase price of about $18 million. This acreage will target the Austin Chalk formation, the same formation that is targeted in many locations in the Eagle Ford.

PetroQuest Acquires Central Louisiana Austin Chalk Oil Property - 24,600 Acres

Source: PetroQuest

The company is looking to replicate the improvements seen in the Karnes County Austin Chalk. In Karnes County, the average horizontal well drilled before 2013, before fracing was widely used, has produced 104 MBOE. The average horizontal well drilled since 2016, utilizing modern completions and drilling technologies, has an EUR of 632 MBOE. This represents an uplift from modern completions of 508%.

PetroQuest believes it can replicate these results. The average unfractured horizontal well in Avoyelles Parish, near PetroQuest’s new acreage, has produced 119 MBOE. If implementing modern methods is able to produce a comparable uplift, modern wells may produce 732 MBOPD. The company reports that even if the uplift from modern operations is not as high, and new wells produce only 600 MBOPD, each well will have an IRR of 60%.

 PQ buying acres with cash on hand, cash from a sale in East Texas and 2 million shares of stock

PetroQuest will pay for this acquisition using $6 million in cash on hand, $8.75 million from the sale of the company’s water disposal assets in East Texas and issuing 2 million shares of stock.

First mover in emerging play in our own backyard

Petroquest Chairman, CEO and President Charles T. Goodson commented, “We are excited to have an early, first mover position in this emerging oil play right in our backyard at a very attractive cost.

“Based on recent well results in the area of our acreage, as well as in South Texas, the application of contemporary horizontal drilling and fracking is showing a material impact on resource recovery from the Austin Chalk formation, which has produced over 1.3 billion barrels of oil since 1902.

Goodson said the Louisiana acquisition would complement the company’s gas-weighted Cotton Valley assets.

“These assets are ideally located with available takeaway options close to the gulf coast refineries and rapidly expanding options for NGLs and associated natural gas … .”

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