Crimson Exploration Offers Q4 Production Update, Gives Prelim. FY13 Capital Plans
Crimson Exploration Inc. (Nasdaq: CXPO) today provides an operational update on recent activity in the Woodbine formation in Madison and Grimes Counties, Texas, announces fourth quarter production at the upper range of guidance and announces its preliminary 2013 capital program.
Madison County, Texas – Force Area Woodbine
In Madison County, Texas, Crimson spud the Nevill-Mosley #1H well (82.0% WI), targeting the Woodbine formation, and is currently drilling at approximately 8,130 feet. The Company anticipates drilling to a total measured depth of approximately 15,000 feet, including a 6,300 foot north-south lateral, and conducting approximately 22 stages of fracture stimulation. Completion operations are expected to begin in March with initial production to follow in April.
The Nevill-Mosley #1H well's surface location is located approximately 1.9 miles to the northwest of the Mosley #1H well (84.3% WI) which commenced production in March 2012 and has cumulatively produced in excess of 178,000 barrels of oil equivalent (85% oil) to date. The Nevill-Mosley #1H is Crimson's first well in the 2013 capital program, and upon completion of drilling operations the rig is anticipated to move 1.7 miles east to begin drilling the Mosley B #1H well (86.3% WI).
The Gatlin #1H well (3.1% WI), operated by Woodbine Acquisition LLC, was successfully completed in the Woodbine formation at a total measured depth of 15,720 feet, including a 6,450 foot lateral. The Gatlin unit is located approximately 0.5 miles south of Crimson's Mosley #1H well. The well was placed online with a 24-hr initial production rate of 1,436 boepd.
Grimes County, Texas – Iola/Grimes Area Woodbine
In Grimes County, TX, the Covington-Upchurch #1H well (67.8% WI), was successfully completed in the Woodbine formation at a total measured depth of 15,228 feet, including a 5,190 foot lateral. The well was fracture stimulated with 15 perforation stages, using the perforate and plug completion method.
Full flow back operations have been postponed as a result of delays in completing infrastructure capable of handling natural gas production with higher BTU content in the area. Crimson has arranged for installation of a refrigeration unit which is expected to be completed by mid-February. Once installed, this unit will allow Crimson to increase production to optimum rates, provide formal initial production results, and capitalize on higher margin natural gas liquids production.
Fourth Quarter Production Results
Production for the fourth quarter of 2012 was approximately 3.4 Bcfe, or 36,840 Mcfe per day, achieving the upper end of the Company's stated production guidance range of 34,000 – 37,000 Mcfe per day. In the fourth quarter, crude oil and natural gas liquids production increased to 254,039 barrels, or 45% of total production, up from 207,272 barrels, or 34% of total production, in the fourth quarter of 2011. The increase in liquids production is a result of a strategic shift toward Woodbine and Eagle Ford projects that was initiated in 2011 amid continued suppressed natural gas prices.
Preliminary 2013 Capital Program
In 2013, Crimson will continue to focus on its extensive inventory of high margin, low risk crude oil and liquids-rich projects in the Woodbine formation with a continuous rig program planned for 2013. Subject to capital availability, the company may also drill test wells in the liquids-rich James Lime formation in East Texas and/or the crude oil and liquids-rich Buda formation in Dimmit County, TX. The complete 2013 capital program is being finalized for approval by the Company's Board of Directors.
Under the preliminary capital program the Company estimates a 2013 year-end crude oil and liquids production mix of approximately 55% of total production. Crimson will continue to maintain a prudent hedging program to mitigate commodity price fluctuations in 2013 and has secured a WTI price floor of $101.25 per barrel on 168,000 barrels and a Brent price floor of $107.44 per barrel on 297,000 barrels, which represents over 80% of forecasted 2013 production of oil and the heavies portion of liquids from currently producing wells.
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