Basic Earth Reports on Texas Gulf Coast Efforts
DENVER, Oct. 17 /PRNewswire-FirstCall/ -- Basic Earth Science Systems, Inc. (Basic or Company) (OTC Bulletin Board: BSIC) has participated in another 3-D 'Bright Spot' prospect in Wharton County, Texas. Similar to, yet distinct from the Turf Grass #1 well drilled last year, this well also targets the Yequa formation slightly deeper than the Turf Grass #1. The well is on confidential status and disclosure of pertinent details has not been authorized by joint venture partners under non-disclosure agreements. However, last week this new well encountered significant pressures and hydrocarbon inflows at 11,300 feet and, similar to the Turf Grass well, these developments required Basic and its partners to abandon drilling equipment and cement off the lower portion of the well. Just as in the Turf Grass well, efforts are now being made to re-initiate drilling at approximately 3,400 feet to re-drill to the target formation. While this is the same strategy used on the Turf Grass, this venture still involves considerable risk and expense. Basic has a 5% working interest and has incurred costs of approximately $275,000 on this effort.
Also in Wharton County, production from the Turf Grass #1 well dropped from 1.5 million cubic feet of gas (MMCF) and 207 barrels of oil per day in August to approximately 1.1 MMCF and 127 barrels of oil per day in September. Diagnostic efforts last week indicated the bottom hole pressure to be 3,600 psi. and that the well had 4,000 feet of condensate (or oil) in the bottom of the well. Normal in the life of a gas well, this occurs once the velocity of gas up the tubing is too slow to carry the liquids out of the well. Concurrently, the hydrostatic load of accumulated fluids at the bottom of the well restricts the well's ability to produce gas. A workover rig was moved onto the Turf Grass well last week to install a 'velocity string' and gas lift valves to aid removal of this excess condensate, restore gas production and forestall buildup of liquids in the future. It is expected that operations should be concluded and the well should return to production at previous rates by the end of this week. Basic has a 5% working interest and expects to spend approximately $5,000 on this enhancement.
Basic had previously reported in its recent Form 10-QSB, dated August 15, 2005, that the Company had undertaken a significant workover to restore production on its PIDCO #2, a deep, high pressure gas well in neighboring Matagorda County, along the upper Texas Gulf Coast. In August, Basic and its partners elected to end efforts to restore production from the existing zone at 14,000 feet and to abandon this horizon (prior to sustaining casing damage, in October 2004 this horizon was producing at 0.23 MMCF and 18 barrels of oil per day). Last week the Company concluded operations to abandon the 14,000 foot zone and has re-completed into a new producing horizon at 13,100 feet. Following this attempt, the PIDCO #2 was tested at a rate of 1.5 million cubic feet of gas and 210 barrels of condensate per day. Currently the surface equipment is being modified and restored to begin selling gas which is expected to commence Wednesday. Basic is the operator of the PIDCO #2 and has a 12.77% working interest in the well. Expenditures to Basic's interest since June 30 are estimated to be $40,000. A portion of this expenditure will be allocated to plugging the abandoned lower zone and a portion will be capitalized as recompletion cost. Finally, due to erratic production rates prior to this repair, oil and gas reserve estimates attributable to this well were not included in the reserves estimates found in the Company's recently filed Form 10-KSB report. Following this successful recompletion, it is highly likely that additional oil and gas reserves will be included in the fiscal third quarter ending December 31 to reflect this new formation.
'It has been a busy few weeks. Simultaneous operations on a number of operated and non-operated fronts has been challenging', observed Ray Singleton, president of Basic. 'There have been disappointments and successes. Our 'stumble' on the Yequa well in Wharton County is disheartening. Our concern on the Turf Grass #1 was unwarranted given the results of diagnostics. And, our success on the PIDCO #2 is impressive. PIDCO should contribute in a considerable way to the Company's cash flow in future financials and be a factor in our burgeoning natural gas reserves. Over the next few weeks and months, with widely ranging efforts from the Williston basin to the Gulf Coast, we hope to exceed not only last year's operational tempo and capital deployment, but also last year's impact to the Company's production and profitability.'
Basic is an oil and gas exploration and production company with primary operations in select areas of the Williston basin (in North Dakota and Montana), the Denver-Julesburg basin in Colorado, the southern portions of Texas, and along the Texas Gulf Coast. Basic is traded on the 'over-the-counter -- bulletin board' under the symbol BSIC.OB.
Information herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by words such as 'should,' 'may,' 'will,' 'anticipate,' 'estimate,' 'intend' or 'continue,' or comparable words or phrases. In addition, all statements other than statements of historical facts that address activities that Basic intends, expects or anticipates will or may occur in the future are forward-looking statements. Readers are encouraged to read the SEC reports of Basic, particularly the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005 and the Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 2005, for meaningful cautionary language disclosing why actual results may vary materially from those anticipated by management.
SOURCE Basic Earth Science Systems, Inc.
Source: PR Newswire (October 17, 2005 - 5:59 PM EDT)
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