Chesapeake Energy Taps Gusher in Hogshooter Play of Texas Panhandle and W. Oklahoma

• Exploratory Hogshooter Well Has Produced an Average of Approximately 7,350 Boe per Day During Its First Eight Days of Stabilized Production

• Company Believes It Will Drill Approximately 65 Additional Wells in the Play During the Next Few Years

Chesapeake Energy Corporation announced last week a significant new discovery in the Hogshooter play in the Anadarko Basin of the Texas Panhandle and western Oklahoma. Chesapeake owns approximately 30,000 net acres in the play, which are more than 90% held by production (HBP) from its legacy deeper Granite Wash production.

Chesapeake has completed two horizontal wells in the Hogshooter formation to date. The Thurman Horn 406H well was drilled to a vertical depth of approximately 10,000 feet with a lateral section of approximately 4,900 feet. This successful exploratory well was drilled more than five miles from established Hogshooter production, but in a section of land where three wells had already been drilled to other formations. During its first eight days of stabilized production, the well averaged daily production of 5,400 barrels (bbls) of oil, 1,200 bbls of natural gas liquids (NGL) and 4.6 million cubic feet of natural gas (mmcf), or approximately 7,350 bbls of oil equivalent (boe) per day. Total cumulative production, which includes five days of flowback testing, is 68,400 boe. Current daily production is approximately 7,000 boe.

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The Meek 41 9H well, located approximately five miles from the Thurman Horn 406H, was drilled to a vertical depth of approximately 10,500 feet with a lateral section of approximately 4,800 feet. During its first 27 days of stabilized production, the well averaged daily production of 1,300 bbls of oil, 365 bbls of NGL and 1.4 mmcf, or approximately 1,900 boe per day. Total cumulative production, which includes five days of flowback testing, is 53,500 boe. Current daily production is approximately 1,400 boe.

In addition to the wells mentioned above, Chesapeake has drilled two Hogshooter wells that are waiting on completion, the Zybach 6010H and the Hamilton 39 10H. The company’s average working interest in the four wells is approximately 88%. The company estimates its acreage position contains at least 65 more Chesapeake-operated Hogshooter locations to drill during the next few years. The drilling and completion of these 65 wells will be a part of the company’s already budgeted Anadarko Basin drilling program and should result in no increase to the company’s budgeted capital expenditures. Chesapeake had none of the 65 potential future Hogshooter wells classified as proved reserves in the company’s March 31, 2012 reserve report.

Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, said, “We expect this new Hogshooter discovery to provide a significant boost to Chesapeake’s focus on harvesting its existing assets for growth and value creation rather than on pursuing new leasehold. In addition, this new Hogshooter development area should further enhance our growing liquids production, which we expect will have transformational effects on our company’s operational and financial performance in the years ahead. Further, based on production results to date and our research of industry production records, we believe the Thurman Horn 406H well is one of the best oil wells drilled onshore in the Lower 48 in the past several decades. This discovery exemplifies the scale and quality of our world-class asset base and the skill and creativity of our technical teams. Their hard work and determination is continuing to create significant additional value for our shareholders and other stakeholders.”

UnionTown Energy Enters Into $2.5 Million Investment And Acquisition Agreement

A rig drills UnionTown’s second “New Miami” well last month. Sun Times photo by Darryl L. Flowers

New Miami #42-20H upgraded for production, second well being drilled on Montana Property

BILLINGS – UnionTown Energy Inc. on Monday announced that it has entered into a $2.5 million Investment agreement from NX Petroleum Inc. for the development of the company’s Oil assets.

In addition, UnionTown has entered into an acquisition agreement with NX Petroleum whereby NX Petroleum will acquire UnionTown Drilling Inc., the subsidiary of UnionTown Energy Inc. that owns and operates the company’s assets, in a share exchange on listing of the entities on a European Exchange.

NX Petroleum is under a Letter Of Intent to be acquired by a European listed Oil Company which will be announced in the near future.

Reorganization Key Points

UnionTown Energy is issuing shares from its wholly owned subsidiary, UnionTown Drilling Inc. to NX Petroleum Inc.  Under the terms of the agreement, NX Petroleum Inc. shall have first right of refusal for further financing under the same terms, specifically as to the debt held by UnionTown Drilling Inc. from shareholder loans and all assets. Under these terms, NX Petroleum Inc. will issue its shares to UnionTown Energy Inc. To acquire the remaining shares of UnionTown Drilling Inc. on a share exchange basis  upon conclusion of NX Petroleum Inc  listing on a European exchange.

NX Petroleum Inc. is in the final stages of working with a European listed company to become listed and has a letter of intent with a European Listed Oil Company.  In this way, UnionTown Energy Inc. will own approximately 48% of a publicly traded company in Europe, with its shareholders retaining their shares in the USA- based entity, UnionTown Energy Inc.

UnionTown Energy Inc., will retain a 10% working interest in the New Miami Property.  It is then the intent to list UnionTown Energy Inc. on the Canadian National Stock Exchange http://www.cnsx.ca/ or a similar exchange with a goal of listing on the NYSE Euronext (NYX) or a similar USA Exchange.  Efforts on this front will begin immediately. UnionTown Energy Inc. will be working with its accountants and auditors to become fully reporting and compliant again.

Michael Butterfield has resigned from UnionTown Energy Inc. and has been appointed and accepted the position of Chief Executive Officer at NX Petroleum Inc. to ensure continuity and a smooth transition for the continued development of the Oil assets.

Patrick Smyth, VP of Finance, has been appointed and accepted the position of Chief Executive Officer and Director at UnionTown Energy Inc.

John Karlsson has been has been appointed and accepted the position of General Counsel and Director at UnionTown Energy Inc.

New Miami Operations

As reported on April 10th in the Fairfield Sun Times: “On Saturday afternoon, UnionTown’s New Miami well was observed in production” with some product now being delivered from #42-20H to the refinery. See the entire article here at http://tinyurl.com/utogarticle

The Company encountered higher than expected levels of water from its first well, #42-20H, and significant changes have been ongoing since January. Well #42-20H now has a Halliburton “Super Pump” (patented pump GP4-17S0) on it, which specifically addresses the issues that caused some problems during completion as we are now able to handle high volumes of liquids and gas.

The second well that is being drilled at New Miami has hit the horizontal phase of the drilling, and the Company’s operators and consultants reported that the pay zone is much greater than that in the first New Miami well pay zone.

New Business Can Turn Oil Field Waste Into Drinking Water

Photo by Greg Kendall-Ball/Abilene Reporter-News Chris Tesarski, CEO of Sandbox Energy, drinks from a bottle of treated wastewater from an oil well last week.
By Greg Kendall-Ball
Abilene Reporter-News

CALLAHAN COUNTY, TEXAS — A team of scientists and oil business executives from Canada and New Mexico have performed a West Texas miracle.

Instead of turning water into wine, these four men have turned an oil field waste by-product into fresh, potable water at a dusty oil lease south of Clyde Lake in Callahan County.

Tens of thousands of oil wells across the U.S. — like those scattered throughout the Big Country — use water to force oil out of rock formations and up to the surface. The briny, dirty water is then either shipped to a disposal facility or forced back into the earth through an injection well.

Disposal is expensive — so much so that thousands of wells are inoperative as a result of the cost of hauling off wastewater. Re-injecting the dirty water comes at a price, too — in wear and tear on pumps and hoses caused by the buildup of waste particles over time.

The newly formed Texas Sands Resources partnership — made up of Chris Tesarski, the CEO of Canadian oil company Sandbox Energy which owns the oil lease; Paul Fairchild of Nu-H20 from Socorro, N.M.; and J.C. and Ian Ireland of Erin Consulting of Saskatchewan — have developed a process for turning that expensive waste product into useful, clean water.

“What we have is a revolutionary application of existing technologies,” Tesarski said. “Oil and gas water is not a pretty thing. It’s certainly not drinkable, and even reusing the wastewater in oil production has its shortcomings. This new process changes that.”

The process involves two basic steps: removing solid waste particles, then desalination.

A proprietary system developed by Erin Consulting takes the dirty water and removes the solid waste particles.

Before the company’s four-stage process, there are between 90 and 100 parts per million of oil in the water pulled from the oil wells, said Ian Ireland, a chemist.

After the process, there is zero oil in the water, Ireland said.

The Irelands’ process involves first adding a chemical to improve the pH levels of the water. Next comes the magic ingredient — a nanopolymer microencapsulating flocculating dispersion, or MFD, developed at the University of New Brunswick. The milky liquid is the secret to making the whole operation work.

“Think of it as millions of little hands reaching out and grabbing onto the oil particles, then dragging them down to the bottom of the tank,” J.C. Ireland said.

After the MFD, an activator is added, then finally a conditioner, scientifically described as “goop.”

Once the chemicals are added, the water is allowed to sit. After several hours, the flocculant — all the oil and impurities encapsulated by the chemical “hands” — rests at the bottom of a tank, with a column of pure, crystal-clear water above it.

That water — free of impurities — can then be re-injected into an oil-producing well, extending the life of the equipment by reducing wear and tear and eliminating the need to dispose of it.

Or, it could be sent to the next phase: desalination.

In a process known as forward osmosis, the salty water is “tricked” into flowing across a filtering membrane into a container of water with high concentrations of ammonia. That ammonia, Fairchild said, is much easier to remove from water than the salty compounds.

The ammonia-water mix is then fed into a distilling tower where it is heated. The ammonia boils off, leaving behind pure, potable water.

Tesarski demonstrated just how potable it was by filling a bottle from a spigot on the distilling tower and taking several big gulps.

The oil lease south of Clyde Lake is the first commercial demonstration of the technology, Tesarski said.

The group plans to build a prototype facility at the lease by the summer and use it to build a client base and attract investors. Without any publicity, the group already has offers to install treatment plants on more than 10 nearby oil fields.

“Our hope is to be able to put lots of these plants on leases around here. We can make these oil fields, some that only generate two to five barrels a day, productive again, and we can generate clean, fresh water, too,” Tesarski said.

The prototype facility will be capable of treating 5,000 gallons of water per day, the group said.

The new technology could produce two things West Texas desperately needs: water and jobs.

“We’re committed to this area, this community,” said Paul Fairchild. “We’re committed to Abilene. We plan to build a facility here, to hire people here.”

© 2012 Abilene Reporter-News. Reprinted with permission. Original article can be found at http://www.reporternews.com/news/2012/apr/23/new-business-can-turn-oil-field-waste-into-water/

TENNESSEE: Volunteer State Well Reports Good Flow

A Tengasco well in Kansas – Tengasco photo
BYRDSTOWN, Tenn. – According to a press release issued by Southeastern  Energy, Inc. officials, an oil well hit on the Carl Huddleston farm in Pickett  County, TN on Monday, March 15th is believed to be the biggest well ever  discovered by the firm.

G. Allen Murrell, owner of Southeastern Energy, Inc. and North American  Resource Group said, “The well began flowing oil out of the ground within 15  seconds of drilling into the pay zone!” Southeastern Energy is a full service  oil and gas developer located in Glasgow, KY.

The new well is flowing an estimated 40 barrels per hour still shut in.  Although very early in its life, if this well were opened up, it would  probably produce several thousand barrels a day.  At today’s record high oil  prices, this well could have the potential to make a huge amount of money in a  short period of time.

The company’s other owner, Doug Smith, hit the largest well in Tennessee  history in neighboring Overton County in 1994.  Smith stated at the time, “I  have seen plenty of big wells drilled in but I have never seen one come to the  ground that quickly.  It made about 90 barrels of oil in 15 seconds!  Over  $3,000 of oil in 15 seconds, I’d say that’s quick.”

Smith and Murrell have several other leases in Pickett, Fentress and other  Tennessee counties they plan to drill.  They also have areas in the Western  United States, including Texas, which will be drilling soon.

Enterprise Energy “Spuds” First Well

Enterprise Energy Resources Ltd.  announced on Monday  that it has spudded its first well, Archer #1, in Sheridan County, Montana. Enterprise holds a 100% working interest in approximately 30,000 net acres (47 net sections), subject to a 10% back-in right.
The Archer #1 well is located on the northern edge of Enterprise’s land package and lies about 25 miles south west of several successful Bakken wells drilled recently in Montana by one of the area’s major operators. The well will evaluate the oil potential of the underlying formations, including the thick Bakken and Three Forks formations within the Williston Basin in North Eastern Montana.
The Archer #1 well, with a TVD (total vertical depth) of 8,100 ft, is anticipated to take about 14 days to drill, evaluate and case at an estimated cost of approximately US$1.1 Million.
“With the rapid north western migration of the productive Bakken and Three Forks play, we anticipate that this well will demonstrate similar positive prospectivity over Enterprise’s land holdings. Historical wells in this area have encountered both horizons and there is current local production from deeper zones. Core taken from the well will be evaluated for potential future well stimulation.” commented Geoff Carrington, President & CEO of Enterprise. “A successful well would have a significant impact on the Company.”