RE:2nd Shale Well Results at CASE Today, Centaurus Energy (CTA; CTARF) reported the initial production results (P30; 30-day average) of its second well of a first-stage, five-well pilot program in the Vaca Muerta shale formation in Coiron Amargo Sur Este (CASE), being drilled in partnership with Pan-American Energy (PAE); release below.
The results from the second well are 1,003 boe/d (of which Centaurus has a 35% interest). Almost exactly the same as the first well (reported in late-Sept)
The wellhead pressure on the second well was significantly higher than the first well
Moreover, the third well has been completed and is already flowing; publication of results should follow in due course.
For purposes of context, the company’s most recent resources report for Coiron Amargo, which calculates a net present-value of USD 1.5B for Centaurus’ net interest in Coiron Amargo assumes average production on each well of ~800 boe/d. In stark contrast, the company currently has a total enterprise value of USD ~40mm.
Centaurus has the necessary capital (up to $40mm) for its share of the drilling and development costs available to it from PAE (7%interest-rate).
Furthermore, the lateral length (2,000 meters) and the depth (3,100 meters), the same as the first well, is not absolutely aggressive; future wells could be more prolific in the event that they are drilled deeper and/or wider. In that vein, we would expect that PAE and Centaurus will focus on the optimal risk-adjusted rate-of-return on capital.
In addition to the instant additional production, the drilling and production results could materially affect the company’s year-end audited reserves report.