Energas has acquired a new property in eastern Kentucky, which consists of approximately 3,000 acres and 18 wells that have been closed for periods ranging from 20 to 40 years.
Initial production rates for the wells in the field have been reported to be in the range of 10-100 barrels of oil per day and up to 250MCF of natural gas per day. The company is currently evaluating the full potential of this property and has begun work on the first well.
Commenting on the decision to make the purchase, George Shaw, Energas president stated, The natural gas in this property has never been produced. When the wells were initially completed 20 to 40 years ago, gas prices were as low as $0.15 per MCF and the nearest pipeline was, economically speaking, too far away.
We suspect that the former operators may have been skimming the oil off the top to keep the gas pressure behind the oil. If that is the case, a majority of the oil and gas reserves are possibly remaining in the formation. At today’s prices, this could be a very lucrative opportunity for the company.