Sacgasco increases gas production

The company has working interests in seven gas fields in the Northern Sacramento Basin and is the operator of wells in six of these fields. The fields are Rancho-Capay, Rice Creek East, Malton, Dutch Slough, Denverton Creek, Los Medanos and Willows. 12 wells are in production and 14 are currently idle.

In addition Sacgasco has identified numerous plugged wells on its leases (for example Alvares-1) that can be cost effectively re-entered, deepened or side-tracked to enhance production and/or evaluate appraisal and exploration targets.

70% production growth in current quarter

Sacgasco has reported that gross production has increased materially in the current quarter to over 1000 million ft³/d, which in dollar terms equates to gross revenue of ~US$3000 per day (production net to Sacgasco is ~570 million ft³/d). This is a ~70% increase to the average daily gross production of 584 million ft³/d reported in 4Q17.

The increase is primarily due to the low cost re-activation of two previously idle wells that are now producing profitably without the need for more costly workovers.

Near-term production ramp-up

Sacgasco has commenced an active wellwork programme that has delivered material and progressive production growth and will bring many of the 14 idle wells back on stream. Based on a combination of re-activations, well-work and workover appraisal activities now underway, the company expects daily production to exceed 1500 million ft³/d by the end of March. This is forecast to increase to over 2000 million ft³/d by the end of June 2018. Further gains are anticipated in the second half of 2018 from the existing 26 well portfolio.

These production targets do not include gas flows from the Dempsey well, or production from projects such as Alvares. In addition, development drilling that Sacgasco may undertake across its extensive underexplored Northern Sacramento Basin acreage may increase production more rapidly. Further acquisitions in California that immediately add to gas production are also under active review.

Dempsey 1-15 update

The Dempsey 1-15 well continues to be produced on an extended production test, while the additional testing programme at Dempsey is designed and permitted.

Sacgasco and its Joint Venture (JV) partners have been working diligently to assess the most economic way to monetise the Dempsey well and the JV expects to provide an update shortly.

Sacgasco’s Managing Director, Gary Jeffery, said: “Alongside our strategy of exploring and testing the under-explored older gas-bearing zones in the Sacramento Basin through drilling wells such as Dempsey, we have commenced an active works programme to ramp up production from our existing portfolio, the majority of which was acquired last year.

“There is lots of upside here, and the growing cash flows underpin a more aggressive well development programme across the seven fields which will in turn grow production even more. Our acreage in the Northern Sacramento Basin still has extensive untapped potential, and we will systematically exploit these fields fully.

“We look forward to updating shareholders as and when we bring more wells on stream. Concurrently, we are actively pursuing multiple larger gas targets in older strata, with Dempsey and Alvares our first two priorities.”