(MENAFN- ProactiveInvestors)
() is set to increase its oil production through the acquisition of ’s (OGI) interests in Napoleonville Louisiana for US$575000.
This increases its interest in Desiree by 3.99% to 39.6% and in Dugas & Leblanc #3 by 15.3% to 55.3%.
The company is also acquiring OGI’s 18% interest in Fausse Point including OGI’s operatorship and plug and abandon obligations which are estimated at about $100000.
It is subject to OGI’s shareholder approval expected in January 2015.
Grand Gulf also continues to look for new opportunities and is targeting projects with existing production and behind the pipe reserves.
Desiree Project
The Desiree Project came on production in July 2013 and has produced over 176000 barrels of oil.
It has remaining Proved Reserves of 840000 barrels of oil.
The Hensarling-1 well at the project is currently producing at an average rate of 420 barrels per day with no water production.
With the acquisition of OGI’s interest Grand Gulf’s share of monthly production will increase to 3600 barrels per month.
Production is sourced from the thicker Cris R III (49 feet pay) formation and at the presently depressed oil price of US$75 per barrel will generate revenues of US$260000 per month (after royalties and operative costs) or US$3.2 million.
Production will continue through a 25/64 inch choke until depletion takes place or water production becomes excessive and will then switch to the thinner Cris R II (31 feet pay) formation.
The JV has secured the Templet-1 as a disposal well for Hensarling-1 when it commences to produce water. The Templet-1 was drilled from the Hensarling-1 pad.
Dugas & Leblanc Field
The D&L#3 “M” sand was successfully perforated and placed on production on 18 October 2011.
The well was placed on a jet pump in December of 2013 and produces 90 barrels of oil 70000 cubic feet of gas and 410 barrels of water per day from a 21/64 inch choke.
GGE’s share of monthly production will increase to 1150 barrels of oil per month.
Production is sourced from the Big Hum “M” sand and is expected to generate revenues of US$65000 per month or US$800000 per annum.
The joint venture recently converted the D&L #2 well into a salt water disposal well.
Approval is currently being awaited for the well to become operational.
Following further seismic and analogue interpretational work the company believes that the M sand may have further updip potential of an additional 5 billion to 15 billion cubic feet of gas which if confirmed will need to be recovered from either a development well or side track to the D&L#3.
Additionally there continues to be recoverable oil from the “N” and “O” sands. D&L#3 was intended to produce from the N and O sands but it cross the fault below and intersected these sands on the upthrown wet side of the fault.
Analysis
The acquisition of ’s interests in the Desiree and Dugas & Leblanc projects is expected to increase ’s oil production.
Production from Desiree will increase to 3600 barrels per month while Dugas & Leblanc output will rise to 1150 barrels per month.
This will generate revenues of US$260000 per month and US$65000 per month respectively offsetting some of the impact from lower oil prices.
The lower oil price offers Grand Gulf further opportunities to acquire projects with existing production and reserves.
Grand Gulf shares are expected to rise following the acquisition.
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