Illinois Basin Project - Unconventional Horizontal
Unconventional Horizontal Program Highlights:
- Burkett #5-34, the Company’s first horizontal well targeting the Lingle Formation, was completed in May 2014. Production testing commenced in late July 2014.
- Burkett 5-34 production has been gradually increasing to peak rates of approximately 310 bbl/d of light gravity oil.
- Strata-X currently holds an undrilled horizontal location permit (Raccoon Creek #1HOR) and is in the process of permitting one new horizontal location targeting the Lingle Formation.
- The Blessing 1-4H (Grand Tower) well acquired in May 2014 remains on production. The Company is examining the option of stimulating ~75% of the lateral portion of the well which remains unopened to the formation.
- Strata-X holds a 100% interest in approximately 25,000 net acres prospective for oil accumulations in the Lingle and Grand Tower Formations.
- Burkett 5-34HOR -Lingle Formation
- Location: Clay County, Illinois
- Blessing 1-4H - Grand Tower Formation
- Aquired March 2013
In June 2013, Strata-X acquired all necessary regulatory approvals to drill the Burkett 5-34HOR well, which was designed as a horizontal test of the targeted Devonian Lingle formation, and spudded the well on 10 July 2013. It was designed to be drilled in two stages. First, the Company drilled a vertical hole to the top of the target formation and then cored approximately 60 feet of the formation. Next, the Company plugged back the vertical section of the well and drilled the horizontal leg. The vertical portion of the well reached a total depth of 4,730 feet. The Company successfully cored 59 feet of the target formation and logged the vertical section of the well. Initial core analysis indicated two oil zones in the dolomite reservoir with a total net thickness of 10.5 feet over a 30-foot interval.
On 15 May 2014, the Company successfully completed a 7-stage stimulation of the Burkett 5-34HOR well using approximately 176,000 pounds of proppant. During post completion stimulation production testing, the well flowed back approximately 116 barrels (“bbl”) of light-gravity oil along with 2,100 bbls of completion fluid and formation water over a 30-hour test period, the well ceased to flow on its own, a standard flowback occurrence(1).
A limited production test began in July 2014. Upon final production facility construction in August 2014, the well was placed into full production testing. The Burkett well continues to clean up as the hydrostatic pressure is drawn down in the well. The ultimate performance of the Lingle oil zone on the Burkett 5-34HOR well is being masked by the communication with a deeper water zone and, as a result, the Lingle reservoir cannot fully contribute to flow until the reservoir pressure in the wellbore is drawn down. Steady progress is being made to reduce the hydrostatic pressure and improvements to the production facilities have been made to help facilitate the draw down. Future wells in the program will be designed with smaller stimulations to minimize the risks of communication with the deeper reservoir.
Strata-X has constructed the necessary flowlines to connect the production facilities at the Burkett 5-34HOR well to a Company owned salt water injection well, which allows the Company to dispose of the produced water at a cost of approximately $0.12 cents per barrel.
In advancing the development of the Vail Oil Project, Strata-X acquired a new drilling permit for a well called the Raccoon Creek #1. This well is expected to test the Devonian Lingle formation and is the second horizontal appraisal well for Strata-X in the Vail Oil Project. The well is located in Clay County, Illinois northwest of the town of Flora, Illinois, approximately 7 miles northeast of the Company’s first horizontal test well, the Burkett 5-34HOR. The permit issued by the Illinois Department of Natural Resources for the Raccoon Creek #1 authorizes up to the following (approximate) drilling parameters: a true vertical depth of 4,500ft, a true measured depth of 9,300ft and a horizontal leg length of 4,300ft.
Grand Tower Formation
The Company completed an acquisition in March 2014 consisting of approximately 23,595 net acres of production and exploration assets in the Illinois Basin adjacent to its existing assets. Included in the acquisition was the existing, then shut-in, horizontal well called the Blessing 1-4H. This well drilled by the prior operator in mid 2013, targeted the Grand Tower Formation located directly beneath the Lingle Formation (which is the target interval for the Vail Oil Project). Following a stimulation of only 25% of the horizontal portion of the wellbore the previous operator was able to achieve production rates as high as 100 bopd with high water cuts. The Company does not feel that the previous operator has adequately tested the Grand Tower formation. The Blessing 1-4H wells was put on production in June 2014 while the Company reviews it options to stimulate the remaining 75% of the lateral portion of the wellbore.
(1) The stated production information originally appeared in a news release issued by the Company on 22 May 2014, which original news release is available on the Company’s website.