Calgary, Alberta--(Newsfile Corp. - May 19, 2020) - Cuda Oil and Gas Inc. (TSXV: CUDA) ("Cuda" or the "Company") is pleased to announce an operations update at its Shannon Secondary Recovery Unit ("SSRU") in the Powder River Basin, Wyoming. Production response from the gas flood at the SSRU has been widespread and prolific. Thirteen (13) of a total of thirty-four (34) producing wells have experienced a significant increase in oil production. In January 2020, the combined production of these 13 wells averaged 500 bbls/d; in March 2020, these wells produced an average of 710 bbls/d. This represented over 40% growth in production, after only two months of injection and at injection rates well below field capability. Importantly too, these 13 wells are located across the entire SSRU, implying that the permeability and homogeneity of the reservoir is better than currently modelled.
Average operating production for SSRU reached 1,375 bbls/d (375 bbls/d net) in March 2020. New drilling in combination with injectivity response allowed production to peak at 1900 bbls/d (520 bbls/d net). For perspective, 1432 bbls/d (396 bbls/d net) is the projected 2020 exit rate of the Proven Developed category of the Ryder Scott reserves report dated December 31, 2019.
The Company continues to ramp up injection efforts. Four (4) injectors were online in January 2020, another three (3) came online in March 2020, and another one (1) is expected to come online in late Q2 or early Q3.
Glenn Dawson, President and Chief Executive Officer of Cuda, stated: "The production results at the SSRU validate the asset and our miscible gas-flood program and further substantiate our investment in the project. The SSRU's performance continues to draw comparisons to the proximal Sand Dunes Muddy Unit which saw its production increase over 250% in less than six months under miscible flood."
Dawson also added "As the SSRU continues to outperform our simulation models, we estimate our current breakeven price of approximately US$15/bbl WTI will decline. Additionally, the current price differential at Guernsey (SSRU delivery point) trades at a US$2.45/bbl premium to WTI, giving additional downside protection. The challenged pricing environment for natural gas also works in our favor for injection as we seek to pressure up the reservoir to enhance future recoveries of this long-term asset."
Highlights
- Recently drilled fifteen (15) new wells at 100% success rate. Eleven (11) new producers and four (4) new injectors are online as of March 2020.
- Source Natural Gas Pipeline with 15 MMcf/d of capacity was commissioned and online in February 2020. The total purchased natural gas averaged 1.8 MMcf/d in March at an average price of US$1.60 per mcf. Pricing for injectant continues to trend lower, with average cost of April natural gas at US$1.47 per mcf and April Y-Grade liquid injectant at US$0.15 per gallon.
- Currently 7 injectors are online with the total injection rate including Sourced Natural Gas, Field Solution Gas and Y-Grade liquid injectant at 2.7 MMcf/d equivalent in March 2020 and 2.5 MMcf/d equivalent in April. Targeted injection rates for May and June 2020 is 4.0 MMcf/d and 6.0 MMcf/d equivalent, respectively. Total SSRU injection capability is expected to be 8.0 MMcf/d with the existing development.