Further Success at North San Ardo
- Successful completion of Lombardi 14-27H horizontal development well
- First side track of old wellbore to new location
- Current production rate estimated at average 475 bopd
- North San Ardo producing 740 bopd (despite 4 wells shut in for steam and/or mechanical works)
- Recent nearby Oxy acquisition values production at US$125,000 per producing barrel per day
Neon Energy Limited (Neon, ASX: NEN) is pleased to announce the successful completion of drilling operations on the Lombardi 14-27H well at the Company’s 100% owned North San Ardo oil field in California, with the well currently producing at an estimated average rate of 475 bopd. Based on experience with similar wells at North San Ardo, Neon anticipates that the production rate will continue to rise for a period of time before natural decline commences. Field production currently stands at 740 bopd, with two wells currently shut in as part of the ongoing cyclic steaming programme, and two others shut in for routine mechanical reasons. Based upon a recently reported agreement between Occidental Petroleum and Nations Petroleum for purchase of Nations’ interest in the Lost Hills field, a benchmark for valuing Californian oil production at US$125,000 per producing barrel per day has been set. On this basis, the increased production at North San Ardo has a marked impact on the asset’s value.
Neon re-entered and sidetracked an existing well in order to relocate the bottom hole section to a more productive section of reservoir. This technique provides the benefit of new well production at a lower cost. In this case payout is expected in less than one month. Although initial production rates commonly decline steeply, the Lombardi 14-27H is anticipated to be one of the better performing wells in the field due to its optimal location, chosen with the benefit of 3D seismic data coupled with 3D visualisation technology.
Further near term enhancement to field production is expected from the ongoing cyclic steaming of the field, which has shown encouraging results thus far.
Neon’s Managing Director Ken Charsinsky commented:
“This is our second well located with the advantage of 3D seismic data coupled with visualisation software. Using an existing wellbore to reach a new bottom hole location is operationally challenging, but in spite of a few minor problems, the well was drilled for less than the cost of a new well with encouraging initial results.”
Download this document
