(MENAFN - ProactiveInvestors - Australia) Sun Resources (ASX: SUR) has started a three well drilling program targeting the Texas Woodbine Tight Oil Play at the Amerril Oil Project that presents the opportunity for early cash flow.
The wells will be drilled in the SW Leona Area of the Amerril Oil Project and consist of one vertical fracced well, Seale-1, and two horizontal wells, Seale-1H and T.Keeling-1H.
All three wells will be drilled separately by operator Amerri Energy from the same drill pad with drilling, fracture stimulation and completion estimated to be completed by mid February 2013.
"Sun is pleased to be drilling its first three wells on the Amerril Oil Project, in joint venture with Sun's largest shareholder and operator of the Project, Amerril Energy LLC," managing director Matthew Battrick said.
"The drilling of these three wells, along with the four wells currently being drilled and fracced on the Richland Oil Project, provides Sun shareholders with an investment in the drilling and fraccing of at least seven Woodbine wells over the coming few months.
"Production from each of these wells can be quickly and cheaply tied into nearby production infrastructure for early cashflow."
Sun has a 50% working interest (37.5% net revenue interest) in the Amerril Oil Project.
Amerril Project wells
Seale-1 was spudded on 4 November and is expected to take about two weeks to drill and case for fraccing and production.
The well will test all prospective horizons from the base of the Austin Chalk at a depth of 7,000 feet, to the Buda-Georgetown Formation, above a total depth
of 8,175 feet.
It will be logged and sampled as a 'pilot hole' but it will also be cased for a later vertical fraccing and completion program.
Seale-1 is expected to cost about US2 million, or US1 million net to Sun, which will be funded out of the company's cash reserves.
This will be followed by the T. Keeling-1H horizontal well, which will target up to 7,500 feet of horizontal well section in the target Woodbine Formation.
Both Upper and Middle Woodbine are potential pay and the preferred section to target the lateral will be determined after the Seale-1 pilot hole is drilled and logged.
The lateral well will be drilled in a northerly trajectory to maximise the length of the lateral while remaining within the boundaries of the lease.
Last but not least, the Seale-1H well will target up to 6,000 feet of horizontal well section in the Woodbine.
The lateral well will be drilled in a southerly trajectory to maximise the length of the lateral while remaining within the boundaries of the lease.
With the nearby production infrastructure allowing each of the three wells to be commercialised quickly in the event of success, Sun has the potential to enjoy early cash flow from drilling at the Amerril Oil Project.
Together with the four wells it is participating in at the nearby Richland Oil Project, this has the potential to provide Sun with substantial revenues and presents a strong case for valuation upside.
Success is also likely to lead to further wells on the two projects as well as Sun's wholly-owned Delta Oil Project.