VANCOUVER, BC and TULSA, OK–(Marketwired – April 13, 2016) – Jericho Oil Corporation (“Jericho”) (TSX VENTURE: JCO) (OTC PINK: JROOF), a debt-free growth-oriented oil and gas company focused on Mid-Continent production, is pleased to provide an operational update on its Oklahoma asset base, including its action plan in the first 100 days since year-end acquisitions.
Jericho acquired two assets located in Central Oklahoma with net production to Jericho totaling ~142 BOEPD (490 net BOEPD to the Partnership with Jericho Oil and its private partner as of Closing). The Company acquired a 50% working interest in a 10,000 acre asset and a 25% working interest in a 30,000 acre asset, and intends to acquire an additional 25% working interest in the larger asset to increase production an incremental ~100 BOEPD.
During the first 100 days, Jericho’s operating and technical team began its initial efforts to improve the declining production rates within producing wells as well as manage operating expenses down. A key portion of the Company’s acquisition thesis was the idea that previous distressed operators had not provided the maintenance capital required to implement oil-field best practices and maintain production rates. Accordingly, the team’s effort focused on arresting field-wide and specific well production declines through re-works, clean-outs and pressure optimization on several horizontal and vertical wellbores. During this low price environment Jericho will continue to look to deploy capital in the field that will return monies within approximately 90 days or less.
In accordance with this investment philosophy, the Company identified, during its due diligence period, multiple vertical and horizontal wells which were likely to be strong candidates for acid-based clean-outs. In early March, Jericho began its clean-out program with two vertical Hunton producers. Each well outperformed expectations with payback periods under 45 days as represented below.
Acid Job Statistics
|Well 1||Well 2|
|30-day cum (BOE)||521||383|
|30-day avg. BOEPD||17||13|
|Acid Job Date: 3/1/2016|
|30-day cum (BOE)||881||680|
|% delta vs. pre-acid||69%||78%|
|% delta vs. 30-day avg.||173%||119%|
|Cum to-date (BOE)||996||824|
|Capital Cost||$ 22,000||$ 19,000|
|Payback @ $37.50 / bbl||40 days||45 days|
Against the current price backdrop, minimal capital investments which provide strong, risk-adjusted returns on capital are Jericho’s main priority to increase production across its entire asset base.
Brian Weatherl, Jericho’s Director of Engineering is looking forward to performing horizontal clean-outs which are expected to yield similar results to the vertical tests. Brian stated, “Having worked in the region for the last fifteen years, including ten plus years learning best in-class development techniques and strategies at Chevron, I see a lot of opportunities to arrest decline, improve production and cut costs throughout Jericho’s asset base.”
In addition to the production improvements, the Company moved to cut costs on acquired fields as well as take advantage of economies of scale with its crude purchaser contracts, decreasing per barrel deductions from $3.50 to $1.50 / bbl.
About Jericho Oil Corporation
Jericho is a growth-oriented oil and gas company engaged in the acquisition, exploration, development and production of overlooked and undervalued oil properties in the Mid-Continent. For more information, please visit www.jerichooil.com.