Eon NRG Limited (ASX: E2E) spikes its oil and gas footprints with first well set to be drilled across Powder River Basin containing multiple hydrocarbon reservoirs. The initial work underscores the commencement of permitting process undertaken by the company to secure the drilling and other environmental approvals for its first well in the Powder River Basin, the Govt Kaehne #9-29.
During the quarter ended 31 March 2019, the energy player continued with its geological and economic assessment of the 15,000 acres of oil and gas leases to identify further high-value drilling opportunities in PRB. The oilfields around the leases have shown long-life production which when coupled with improved drilling and completion technology indicate strong well economics for potential future wells within Eon’s leases.
E2E is currently in the process of rapidly completing the permitting requirements to get started with the construction of well pad as its first field activity. It plans to drill the first well, Govt Kaehne #9-29, to a depth of ~6,200 feet which is estimated to take ~ 12 days.
Placed in a structurally high position relative to offset wells, Govt Kaehne #9-29 targets the Dakota Formation which provides pressure support resulting in consistent oil production and wells with higher ultimate recoveries.
The company’s work plan includes the performance of drill stem testing and open hole logging to evaluate the reservoir quality and deliverability on completion of the drilling process, with oil production and sales to follow thereafter.
The Borie Oilfield located in the DJ Basin in Wyoming has returned an increased production after the company deployed a workover rig to the field in April with the objective to return some wells to their full production. Production in April has increased to over 60 BOPD which is above the Q4-18 average daily production rate on the back of reducing propane usage which has improved the economics of the field through lower operating costs.
Due to severe cold weather in North Wyoming, oil production of the company slipped from 16,801 Bbls in Q4 2018 to 14,343 Bbls in Q1 2019. However, the oil produced from the Sheep Springs Field reportedly continued to attract a price premium with the average oil price for Q1-19 being $64/Bbl compared to the average West Texas Intermediate (WTI) price of $54/Bbl.
The company’s oil revenue declined to $721,420 in Q1 2019 in comparison to $832,003 in the previous quarter, primarily reflecting the overall decline in oil price from Q1-18 to Q1-19. But the company informed that WTI oil price has strengthened in April to be as high as US$65.66 per barrel with some market indicators pointing to continued strength in energy prices.
Further, gas prices in the United States have also remained low as a result of over-supply. This translates a drop of $0.91 to $3.14 per MCF in the average sales price of gas. However, compared to the previous corresponding period, this was significantly higher with price of $2.76/Mcf as in Q1-18.
On the capital raising front, the company successfully bagged ~A$2.544 million via a rights issue of 363.5 million shares at a price of A$0.07 per share and had issued one free option for every share taken up in the rights issue, exercisable at A$0.015 with an expiry date of 22 February 2021.
The company’s cash balance stood at $US 2,687,000 as at 31 March 2019. The Annual General Meeting of the company is due to be held on 23 May 2019.
E2E stock price is trading at $0.006 on 1 May 2019 ().
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