PetroShale more than doubles reserves with two acquisitions This Article from the Petroleum Bakken News for May 2nd. Slowly but surely these guys are building another solid growth company!
PetroShale more than doubles reserves with two acquisitions
Since the beginning of 2014, PetroShale Inc. completed two additional Williston Basin acquisitions which more than doubled the non-operator’s proved plus probable, 2P, reserves. As of Dec. 31, PetroShale’s pro forma gross 2P reserves were estimated at 701,200 barrels of oil equivalent (561,900 boe net of royalty interest), but following two additional acquisitions since Jan. 1, PetroShale’s pro forma 2P reserves are now estimated at approximately 2.19 million boe (1.75 million boe net royalty), an increase of 212 percent in gross reserves (211 percent increase in net reserves). Nearly all of those reserves are light, sweet crude, and nearly all assets are in North Dakota and Montana with the remaining small percentage in Canada.
Along with the increase in reserves comes an even greater increase in net present value. As of Dec. 31, the company’s 2P reserves had a before tax net present value at 10 percent discount, NPV10, of C$15 million, but the now estimated 2.19 million boe in 2P reserves have a NPV10 of C$44.1 million, a nearly three-fold increase.
Acquisitions
One of the recent acquisitions involved an 18.75 percent working interest in a proposed eight-well drilling unit operated by EOG Resources in the North Antelope project in northeast McKenzie County. That acquisition alone added nearly 700,000 boe in proved plus probable reserves. In the other acquisition, PetroShale picked up 245 net held-by-production acres in southern Williams County giving the company a working interest of approximately 19 percent in a 1,280-acre drill spacing unit.
Those two acquisitions are in addition to a partnership that PetroShale entered into with Slawson Exploration in 2013 for development of a 17-well drilling program across three sections in the Stockyard Creek field, also in southern Williams County. In that partnership, PetroShale picked up 106 net leased acres for a 5.5 percent working interest. Slawson and PetroShale acquired a 50 percent equity position in the Stockyard Creek assets from Australian-based Samson Oil and Gas in August 2013 at which point Slawson took over as operator.
North Dakota Department of Mineral Resources Oil and Gas Division records indicate Slawson has 16 wells filed in the Stockyard Creek field, four of which are on active status, 10 are on confidential status and the remaining two are listed as drilling. One of the active wells went on production in September 2013 and over a total of 44 days of production has averaged 430 barrels per day. The other three active wells went on production between Jan. 24 and Feb. 6 and through the end of February have averaged between 373 and 703 bpd over 14 to 29 days on production.
And in May 2013, PetroShale acquired 105 net acres in the Alkali Creek and Elm Tree fields in southwest Mountrail and northeast McKenzie counties with interests in 11 wells operated by Continental Resources.
Seven of the Continental wells are in the Alkali Creek field, three of which went on production in January 2013 and the other four in May 2013. Through February, those seven wells have produced between 397 and 461 bpd over production periods ranging from 243 to 360 days. Continental’s four Elm Tree field wells all went on production in December 2012 and through February have averaged between 222 and 274 bpd over production periods of 382 to 397 days.
Production on the rise
PetroShale has changed its fiscal year end from June 30 to Dec. 31, and in late April reported operating results for a six-month “stub period” from July 1 through Dec. 31, 2013. For that six-month period, PetroShale’s production averaged 185 boepd, an increase of 52 percent over the 122 boepd average production over the previous 12-month period that ended June 30, 2013. The 185 boepd second-half 2013 average output was 89 percent liquids, while the 122 boepd average production over the period ending June 30, 2013, was 97 percent liquids. PetroShale attributes much of that production increase to output from the Slawson-operated Stockyard Creek project but as well as from its MJ/Angus assets.
However, since the beginning of 2014, PetroShale has seen a sharp rise in production, and as of late April, the company’s daily production averaged approximately 240 boe per day. That output represents an increase of 30 percent over the 185 boepd the company averaged over the second half of 2013, and a 97 percent increase over the 122 boepd average output over the full year ending June 30, 2013.
—Mike Ellerd