Crimson Exploration Inc. 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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