US Energy (USE), a natural resources exploration and development company, will participate in the third group of five wells with Brigham Exploration (Brigham) under the terms of a previously announced drilling participation agreement (DPA).
After receiving formal notice of the early 24-hour initial production rate from the sixth well in the previously announced drilling programme with Brigham, USE notified Brigham on January 15, 2010 of its election to participate in the third group of five wells. Brigham notified the company that it will participate for 50% of its original working interest in each of the five 1,280 acre spacing units. USE will participate for the remaining 50%.
Wells seven and eight in the 15 well programme are scheduled for completion initiatives to begin in February 2010. Well nine is currently drilling in the horizontal portion of the well bore and completion initiatives for this well are expected to commence in late February 2010. Wells 10 through 15 are expected to be drilled and completed prior to the end of the second quarter 2010.
As with the previously drilled wells in the programme, the remaining wells are all anticipated to target the middle Bakken formation, and are planned to be drilled to a total measured depth of approximately 20,000ft. However, Brigham has indicated that at least one well of the remaining six to be drilled may target the Three Forks formation.
USE expects that each well in the second and third groups of wells will be completed with an average of 30 fracture stimulation stages.
In the fourth quarter of 2009, USE produced approximately 1,000 net BOE/D and exited 2009 with an average rate of 1,400 net BOE/D for the month of December, exceeding the company’s year end 2009 stated 30 day average production exit rate goal of 1,200 net BOE/D. The December production rate includes approximately 1,100 net BOE/D from the first five wells under the DPA with Brigham and approximately 300 net BOE/D from its three producing wells in the Gulf Coast region. For 2010, the company has set a mid-year production goal of 2,000 net BOE/D (trailing 30 day average) and a year end production goal of 2,500 net BOE/D (trailing 30 day average).
In December 2009, the company’s board of directors approved a $26.5m capital drilling budget for 2010. The capital will be used to complete the Brigham drilling programme and participate (at varying working interests) in up to 14 wells with our Gulf Coast partners. In addition to the budget for anticipated drilling in 2010, the company has capital reserves that it intends to further deploy into asset acquisition opportunities in 2010.
Keith Larsen, CEO of USE, said: “We are very pleased with the progress made thus far in the Brigham drilling programme and the resulting production increases that we experienced in the fourth quarter of 2009. We anticipate the completion of the 15 well programme with Brigham by early summer 2010 and we are diligently working on initiatives to continue our drilling programme throughout the year.
“Our $26.5m 2010 oil and gas budget will allow us to meet our currently anticipated Williston basin drilling commitments and also allow us to expand our participation in numerous wells in the onshore Gulf Coast region. Additionally, our strong balance sheet will allow us to pursue additional growth opportunities this year.”