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CREDO Petroleum Corporation (NASDAQ: CRED) today updated operational
activities.
James T. Huffman, President, stated, “Since
the last operational update, we have made good progress on both our
drilling and Calliope projects. CREDO has recently drilled seven wells
of which four are producers, yielding a 57% success rate. A total of
eight new wells are either awaiting completion or pipeline connection.
Twelve wells are currently on the drilling schedule for the next few
months, including six wells where CREDO will own very substantial
interests.”
Huffman further stated, “We are actively
working with several companies to select and evaluate wells for
application of our Calliope Gas Recovery System. Several companies have
nominated wells for Calliope, and active technical and commercial
discussions are underway. As drilling costs increase, Calliope offers an
increasingly attractive option for adding significant low cost reserves.”
Central Kansas Uplift—To
date, 26 wells have been drilled on company acreage, of which 46% have
been successful. Five of the 12 successful wells had initial production
rates of about 100 barrels of oil per day. Average proved reserves are
estimated to be 50,000 to 55,000 barrels of oil per well. The company’s
first discovery in the play has already produced about 56,000 barrels of
oil in 21 months and is still producing 75 barrels of oil per day. That
well is expected to produce around 130,000 barrels of oil.
Since the company’s last report, six wells
have been drilled of which four are producers, yielding a 67% success
rate. Six new wells are scheduled for the next few months, half of which
will be on prospects where the company owns an 80% working interest.
CREDO has acquired approximately 100,000 gross acres (35,000 net acres)
located in prolific oil producing areas of the play and is continuing to
expand its acreage position. The company currently owns interests
ranging from 12.5% to 80% in 16 separate projects. Three dimensional
(3-D) seismic has proven effective in identifying undrilled structures.
Drilling targets the Lansing-Kansas City and Arbuckle formations at
about 4,000 feet, making the cost of drilling moderate in relation to
potential reserve value. Recent drilling successes have occurred
primarily on prospects where the company owns smaller working interests.
“Our 46% drilling success in this play is
outstanding, and we are continuing to aggressively build CREDO’s
acreage position,” Huffman said. “In
addition to providing good diversification to our other drilling
activities, this project is 100% oil oriented and is expected to improve
the balance between oil and natural gas in the company’s
reserve base. We expect Kansas to begin making a major contribution to
our reserve and production growth.”
South Texas—In
South Texas, the initial test well on the Gemini Prospect resulted in a
dry hole. The 17,000-foot well confirmed the seismic interpretation and
found porous sand. However, the sand was water wet and the well was
plugged and abandoned. CREDO received approximately $1,300,000 of cash
for the multiple prospect package and retained an 11.25% “carried
interest” in the test well.
“Although we are disappointed with the dry
hole, we received considerable up-front cash for the prospect package
and did not incur any cost to drill the test well,”
Huffman said. “The prospect package consists
of two additional Deep Wilcox prospects located to the north of Gemini
Prospect. These two prospects are structurally different and unique
compared to the Gemini Prospect. Those prospects are being further
evaluated, and if drilled, CREDO will have the same 11.25% carried
interest in the next well as it did in the Gemini Prospect test well.”
Elsewhere in South Texas, the company has recently purchased a
15.5% working interest in the Escobas Field. A major workover is
underway on an existing well, and a new 15,500-foot Wilcox well has been
drilled in which the company has a small carried interest. That well is
currently producing 2.7 MMcfd (million cubic of gas per day) on a
12/64ths choke.
Texas Panhandle—In
Hemphill County, the second well on the company’s
3,780 gross acre Humphreys Prospect encountered sands in the Tonkawa and
Cleveland formations that appear to be productive on electric logs. The
vertical well has been completed in the Tonkawa sand and tested at good
rates for both oil and gas. The well is currently waiting on pipeline
connection. The company owns a 25% working interest.
The company recently purchased interests in over 3,800 gross acres in
Hemphill County and has taken over as operator of 11 wells. The new
acreage complements the company’s Humphreys
Prospect and brings its total acreage in the area to approximately 8,300
gross acres.
Oklahoma—In
Oklahoma, three new wells are awaiting pipeline connection and six wells
are scheduled for drilling. CREDO owns approximately 70,000 gross acres
located primarily along the northern portion of the Anadarko Basin where
it conducts an active drilling program. Wells generally target the
Morrow, Oswego and Chester formations between 7,000 and 11,000 feet.
In Carter County, CREDO is waiting on rig arrival to drill a twin well
to its Schaff #1 which has produced 235,000 barrels of oil. The Schaff
will become part of the Twin Forks Deese sand waterflood, and the new
well will develop three oil sands that the Schaff well logs indicate are
productive and which produce in the immediate area. CREDO owns a 41%
working interest and is the operator.
In Major County, drilling is expected to commence shortly on the company’s
1,280 gross acre Pool-Proffitt property. The 9,600-foot Lemmons #1-7 and
Ball #1-18 wells will test a thick package of stacked carbonate zones.
CREDO owns an approximate 70% working interest in the Lemmons and 50% of
the Ball. Ultimately, the company expects to drill 10 to 12 wells on the
prospect.
In Harper County, drilling will commence shortly on two wells located on
the company 3,840 gross acre Buffalo Creek Prospect where 11 wells have
previously been completed for production. Both of the new wells will
test the Chester formation at approximately 6,900 feet. CREDO owns
working interests of 30% and 37% in the two wells.
In Southern Oklahoma, the company is participating in three waterflood
projects as part of its overall strategy to improve the oil ratio in its
reserve base. In Carter County, CREDO owns 17% of the Southeast Hewitt
waterflood unit which has already produced 685,000 barrels of oil and is
projected to ultimately produce about 1,200,000 barrels. The company
also owns about 22% in Phase 1, and 12.3% in Phase 2, of a Twin Forks
Deese sand waterflood unit that is being formed and is expected to
produce about 1,000,000 barrels of oil. In Love County, CREDO owns 13%
in Phase 1, and 9.5% in Phase 2, of the Eastman Hills waterflood unit
that is expected to produce about 500,000 barrels of oil.
Management Comment—“I
believe that we are making solid progress on Calliope as we actively
discuss detailed commercial structures related to specific wells that
have been nominated by several companies,”
Huffman said. “Our ultimate goal is to strike
balanced agreements that suit the needs of joint venture partners, and
which maximize the economic potential of this proven, proprietary
technology for the benefit of our shareholders. We believe Calliope will
offer an increasingly competitive alternative for efficient, large-scale
reserve additions, particularly in this environment of high and rising
new well drilling and completion costs.”
Huffman further stated, “We are also pleased
with the results of our drilling operations. Our upcoming drilling
schedule includes a number of wells where CREDO owns very substantial
interests. Success on those wells will have a very positive impact on
our reserves and production. As discussed in our August 26 press release
announcing the addition of Tim Pownell to our executive team, we are
actively building our operations management capacity in anticipation of
the increasing levels of activity on both Calliope and drilling.”
For more information about the company, visit http://www.credopetroleum.com.
CREDO Petroleum Corporation is a publicly traded independent energy
company headquartered in Denver, Colorado. The company is engaged in the
exploration for and the acquisition, development and marketing of
natural gas and crude oil in the Mid-Continent and Rocky Mountain
regions. The company’s stock is traded on the
NASDAQ System under the symbol “CRED”
and is quoted daily in the “NASDAQ Global
Market” section of The Wall Street Journal.
This press release includes certain statements that may be deemed to
be “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements included in this press release, other
than statements of historical facts, address matters that the company
reasonably expects, believes or anticipates will or may occur in the
future. Such statements are subject to various assumptions, risks
and uncertainties, many of which are beyond the control of the company.
Investors are cautioned that any such statements are not guarantees
of future performance and that actual results or developments may differ
materially from those described in the forward-looking statements. Investors
are encouraged to read the “Forward-Looking
Statements” and “Risk
Factors” sections included in the company’s
2007 Annual Report on Form 10-K for more information. Although
the company may from time to time voluntarily update its prior
forward-looking statements, it disclaims any commitment to do so except
as required by securities laws.