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Red Rock ResourcesAnnouncement

07/03/2016 07:01

RNS Number : 1832R
Red Rock Resources plc
07 March 2016
Red Rock Resources plc
("Red Rock" or the "Company")
Shoats Creek Update
LM#20 Well Production Rates
7 March 2016
Update 
Further to the announcements of 2nd and 22nd February 2016, the Company is pleased to announce that the Lutcher Moore #20 ("LM#20"), located on the Shoats Creek Field in Louisiana ("Shoats Creek"), has been brought into production. Red Rock directly owns a 20% working interest ("WI") and 14.4% net revenue interest ("NRI") in the well. 
Following initial start-up of production operations certain changes to surface equipment were necessary to achieve consistent and sustainable production rates. These changes have been made and the well is currently being produced using a unidraulic jet pump and has been tested at a rate as high as 325 barrels of oil per day ("BOPD") with a 30/64th inch choke; and for the last three days produced in excess of 200 BOPD on an 18/64th inch choke (28.8 BOPD net to Red Rock) with a 30% oil cut. The operator, Shoats Creek Development, Inc. ("SCDI"), has advised that it intends to produce the well consistently at between 200 and 225 BOPD. In addition to oil production, gross natural gas volumes in excess of 250 thousand cubic feet per day ("Mcfd") (which are not presently being sold) have been metered. 
The operator has elected to produce the well at a rate that it believes will maximise total recovery from the well and thus peak potential daily production rates substantially exceed current production levels. However, the objective is to produce at the maximum rate that can be sustained thereby minimising decline, optimising cumulative production and investment returns from the well. SCDI has advised that it believes this rate of production to be in the 200 to 225 BOPD range. The Frio is a formation characterised by a strong water drive. Red Rock's partners believe, based on performance of the Lutcher Moore #16 well and experience of other local operators, that pulling the well too hard could result in pulling water from deeper in the formation outside the oil saturated pay zone which could have negative implications for cumulative life of well performance and result in substantially higher operating costs while pumping the well at lower pressure could result in a flatter decline curve. 
At current levels it is anticipated that the well will have a relatively flat production profile for an extended period of time. The partners in the LM#20 well, including Red Rock and Northcote Energy Limited ("NCT") (AIM:NCT), have plans to commence sales of natural gas in conjunction with bringing production from the next two wells to be drilled online and are in discussions with parties about the infrastructure and access to pipelines to sell natural gas.
Red Rock Chairman Andrew Bell said "The results of LM#20 validate the potential of Shoats Creek where a number of high grade drilling locations have been identified. The strong well performance, modest cost to drill and complete and flat production profile of a Frio well at Shoats Creek allows for economic development at current oil prices and planning and work continues with a view to the next phase of development.
We expect to be issuing further announcements which will go into detail regarding the timing, drilling location and financing of future phases."
Background Note: 
This note repeats for convenience the summary information given in the announcement of 28 October 2015. 
Located in the United States in the state of Louisiana, the Shoats Creek Field was originally discovered by Sun Oil ("Sun") in 1956. Situated on the US Gulf Coast, Shoats Creek has produced over 2 MBOE primarily from numerous Frio and Cockfield interval sands between 5000 and 9000 feet deep. The Frio is one of three major pay zones in the multi-reservoir field. 
The Frio was not initially developed by Sun until the late 1970s when commercial quantities of oil and gas were discovered. From 1981 to 1983 Sun was producing 300 BOPD from their wells in the area. Production waned over time and investigations showed that mechanical well bore issues revolving around tubing leaks were responsible. Reduced production continued until 1984 when remaining wells were plugged and abandoned. The reservoir has subsequently sat dormant for the past 30 years. 
NCT in 2015 begun to re-develop Shoats Creek through infill drilling. The initial efforts will be followed up with exploitation and step out locations based on production results, sub-surface data, and proprietary 3-D seismic. The main risk in the effort is deemed to be mechanical rather than geological and the use of a stronger and more durable casing along with new techniques will be employed to ensure long and productive well operating lives. 
In early 2015 NCT drilled and tested the first well in the redevelopment effort, the LM#20, which was a twin to the historical LM#16 that had been a strong producer until it had to shut down prematurely as a result of mechanical problems. LM#20 reported tested rates of over 250 BO and 500 MCF of gas per day. The LM#20 encountered 10'-12' of pay with an estimated 20% porosity and was perforated over a small interval from 5018-23 feet. 
Red Rock has acquired a 20% WI equivalent to a 14.4% NRI in LM#20. RRR previously entered into an agreement to participate in development activities at the Shoats Creek Field, notably the planned LM#21 and LM#22 wells.
Qualified Person
The technical information that is contained in this announcement has been reviewed by Mr. Kevin Green, a Petroleum Geologist who is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves and who has consented to the inclusion of the technical information.
For further information, please contact: 
Andrew Bell 0207 747 9990  Chairman Red Rock Resources Plc
Scott Kaintz 0207 747 9990 Director Red Rock Resources Plc
Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd 
Christian Pickel 0203 128 8208 Media Relations MHP Communications
Glossary:
BOE: barrels of oil equivalent, gas is converted at its energy equivalent of 6000 cubic feet per barrel of oil
BOEPD: barrels of oil equivalent per day
BOPD: barrels of oil per day, abbreviation for barrels of oil per day, a common unit of measurement for volume of crude oil. The volume of a barrel is equivalent to 42 US gallons
Choke: A wellhead choke controls the surface pressure and production rate from a well. Chokes usually are selected so that fluctuations in the line pressure downstream of the choke have no effect on the production rate.
Mcfd: Thousand Cubic Feet per Day
NRI: Net Revenue Interest
Oligocene: a geologic epoch that extends from about 33.9 million to 23 million years before the present
Pay or Payzone: an interval within a rock formation that contains quantities of hydrocarbons thought to be economically viable. This interval is commonly determined using various logging tools run by the operator prior to making the decision to complete a well for production.

This information is provided by RNS
The company news service from the London Stock Exchange
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