The company said that the surface operations have already commenced and the initial well should be drilled in the very near future. The plan for the project is to drill a five well pattern, each of which are producers initially, and once the production slows, a centrally located well will be converted to an injection well, optimizing recovery percentages for the remaining four wells. If this initial five well pattern is successful, two more patterns may possibly be drilled in this same manner. Dragon is working to acquire additional interest in this project as it can.
The newly drilled Paluxy well, in which Dragon acquired a small overriding royalty interest, has flushed in around 15 barrels per day. Also, Dragon has contracted a company to complete the two recently drilled gas wells on the 640 acre lease, via air drilling. These gas wells must be completed in this manner to minimize the risk of excess salt water disposal costs that can easily remove profitability from this type of well, said the company.
Dragon also is working to achieve a deal with its primary operator, Four Star Oil, so that Dragon can receive a larger percentage of its revenues that have been previously pledged for debt. This negotiation will free up operating capital to fund new exploration projects on Dragon’s net revenue Interest leases, as well as to allocate funding towards rework operations on existing wells and leases that are not producing to their maximum ability, or in some cases at all.
