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New credit facility for BNK Petroleum and shale gas operations updates

Oilfield Technology,


BNK Petroleum Inc. has announced that its indirect wholly owned subsidiary BNK Petroleum (US) Inc. has obtained a new US$ 100 000 000 credit facility from Morgan Stanley Capital Group Inc. The initial commitment amount of the new reserve-based facility is US$ 15 900 000.

Funding for shale oil wells

The proceeds from the new facility are intended to fund drilling of Caney shale oil wells in the Tishomingo field in Oklahoma. The new facility will bear interest at a per annum rate equal to then three month LIBOR plus an applicable margin ranging from 2% to 7% based on the ratio of outstanding borrowings to present value of proved developed producing reserves discounted at 9% (PDP PV9). The facility provides for interest only payments until the July 2018 maturity date. Additional commitment amounts will be subject to new reserve evaluations.

Commenting on the new facility, Wolf Regener, President and CEO said “We are pleased to once again be working with MSCGI, and appreciate their shared belief in the potential of our assets. This facility has been structured to grow with our future cash flow needs and to expand our planned drilling program beyond the 3 Caney wells previously announced. Our intention is to continue our Caney drilling program throughout 2014 and 2015.”


BNK Petroleum's operations in the USA.

Oklahoma Tishomingo Field

The Company has completed drilling the Wiggins 11-2H well (93.4% working interest) with a 5050 ft treatable lateral section. The Wiggins 11-2H, the first of three planned Caney formation wells previously announced, was drilled vertically, had an extensive suite of logs run, was subsequently plugged back and horizontally directionally drilled. This lateral was placed in what the company believes is the most productive stratigraphic portion of the Caney, based on the analysis of previous well results and the pilot hole. The fracture stimulation of the well is expected to begin within the next two weeks. The drilling rig is moving to the Hartgraves 1-5H location and is expected to begin drilling within the week. The Hartgraves 1-5H well (100% working interest) is expected to be drilled in less than 30 days as it will not have a pilot hole.

After drilling the Hartgraves 1-5H well the company’s net Caney acreage will have increased to about 15 500 acres.

Poland

As previously announced, the company successfully placed proppant in 9 of the 20 stages attempted in its Gapowo B-1 horizontal well, and is continuing its recovery of the fracture stimulation fluid. Mechanical issues with the artificial lift equipment resulted in a fluid recovery rate that was slower than anticipated. The mechanical issues were corrected late last week, and fluid recovery re-commenced at higher rates. As of this date, 21% of the fluid has been recovered, with continuous natural gas being produced from the well.


BNK Petroleum's operations in Poland.

The well has had gas rates spiking to over 1 million ft3/d for short periods of time, and is currently averaging between 200 000 - 400 000 ft3/d. These gas rates may continue to increase as the well continues to unload fluid. The preliminary flowback and gas production results obtained so far indicate that the fracture stimulation may have achieved a lower than desired effective permeability. The company believes that only a few of the nine stages may have been successful in creating the desired conductivity. Downhole pressure recorders were installed which will provide further information during the continued flowback. This data will also help in understanding the stronger-than-expected build-up that occurred during the period when the well was shut-in for mechanical repairs.


Adapted from press release by Cecilia Rehn

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/31072014/bnk-petroleum-announces-credit-facility-and-shale-play-operations-update/

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