FINANCIAL HIGHLIGHTS –
- Average net production for the quarter ended 31st December 2016 was 881 barrels of oil equivalent per day.
- Production from the Foreman Butte acquisition has increased to 65,814 barrels of oil (net production) for the quarter ended 31 December 2016 up from 59,959 (revised) barrels of oil (net production) for the quarter ended 30 September 2016.
- Estimated oil and gas revenue was US$3.3 million for the quarter (there is generally a two to three month delay between production and the receipt of funds).
- Oil price differentials in the Williston Basin have improved from $8.00 per barrel 12 months ago to a current estimated differential of between $5.50 and $6.50 per barrel.
- The closing cash balance for the quarter is US$1.5 million.
- $11.5 million debt facility reduction achieved through the sale of North Stockyard for $15 million completed during the current quarter
OPERATIONAL HIGHLIGHTS
- Increased production from September quarter to December quarter despite harsh winter conditions in Montana and North Dakota during December 2016.
PRODUCTION
Overall production for the December 2016 quarter decreased following the sale of the North Stockyard property on October 29, 2016. Production from the Foreman Butte asset increased slightly from the September quarter.
Prior 12 month production by quarter:
PROJECTS
Hawk Springs Project, Goshen County, Wyoming
Permo-Penn Project, Northern D-J Basin Samson currently has a 37.5% Working Interest
The Bluff #1-11 well will be recompleted this quarter. The Jurassic Canyon Springs Formation will be perforated and flow tested first. If this is unsuccessful, the Cretaceous Dakota Formation will subsequently be perforated and flow tested.
Rainbow Field, Williams County, North Dakota
Mississippian Bakken Formation, Williston Basin
Gladys 1-20H
Samson 23% Working Interest
The operator of the Gladys 1-20H well, Continental Resources, sold the well to Kraken Operating, LLC effective October 1, 2016. During the quarter the Gladys 1-20H well averaged 97 BOPD and 151 MCFPD during the quarter. Six additional wells could be drilled in the Glady’s 1280 acre unit in the future.
Cane Creek Project, Grand & San Juan Counties, Utah
Pennsylvanian Paradox Formation, Paradox Basin
Samson 100% Working Interest
Samson’s option period was extended for an additional year by SITLA (the Utah School and Institutional Trust Lands Administration). A Multiple Mineral Development Agreement (“MMDA”) is being finalized with a potash mining company who operates the shallow mineral rights on the leases situated within our project area. Upon entering into the MMDA, SITLA is obligated to deliver 8,080 net acres of oil and gas leases covering our project area located in Grand and San Juan Counties, Utah at a cost of $75 per acre to Samson.
This acreage is located in the heart of the Cane Creek Clastic Play of the Paradox Formation along the Cane Creek anticline. The primary drilling objective is the over-pressured and oil saturated Cane Creek Clastic interval. Keys to the play include positioning wells along the axis of the Cane Creek anticline and exposure to open natural fractures. The 3-D seismic survey is currently being designed to image these natural fractures. The seismic shoot was surveyed and permitted this past summer. This project displays very robust economics in a low priced oil environment using the evidence obtained from a nearby competitor well that has produced 802,967 BO in just over two years and has an EUR of 1.2 million barrels of oil. Initial production rates are around 1,500 BOPD and decline rates are very modest.
Foreman Butte Project, McKenzie County, North Dakota
Mississippian Madison Formation, Williston Basin
Samson 87% Operated Average Working Interest
Samson is continuing with its workover operations to return several shut-in wells back to production in its newly acquired Foreman Butte Project. A fluid-level/production efficiency study has been completed on all the wells in the field to optimize well pump efficiency. We have discovered that many of the wells have sub-performing pump stroke lengths and/or improperly sized pumping units as evidenced from high-fluid levels located inside the wells. Concurrently, a number of wells with behind-pipe pay zones have been identified as recompletion candidates. These recompletions, well optimizations, and several fresh-water cleanout jobs will commence this quarter and should result in a substantial increase in production.
Additionally, two new horizontal laterals are currently being planned to be drilled out of the Maris 1-16H wellbore this Spring. The first will test the Ratcliffe Formation of the Mississippian Madison Group. The second will test the Mission Canyon Formation of the Mississippian Madison Group. The lateral in the Ratcliffe Formation will help define the pressure depletion radius from the existing producing wellbores which will ultimately determine the number of PUD’s (proven undeveloped drilling locations) we can drill in this reservoir. Third-party pressure modelling of the Ratcliffe reservoir shows that relatively high reservoir pressure resides approximately 500’ away from the Maris 1-16 surface location. It is estimated that this new lateral could produce at around 300 BOPD if the third-party pressure modelling proves to be correct. The second lateral in the Mission Canyon Formation will test an undeveloped reservoir that could prove up a new oil field with the potential for many additional well locations.
