Escondido Resources II releases results of horizontal drilling in South Texas

Source: Escondido Resources II, LLC

Escondido Resources II, LLC today announced the results of the company’s 2011 horizontal drilling program in South Texas. Escondido drilled 17 wells in 2011, with 100 percent success and an average initial production (IP) rate per well of nearly seven million cubic feet (MMcf/d) of high Btu gas per day. Escondido currently has two drilling rigs active in Webb, LaSalle and McMullen counties. Current production capacity is approximately 65 MMcf/d, with four new wells scheduled for fracture stimulation in March and April. Production from the new wells is expected to boost Escondido’s total production to nearly 90 MMcf/d.

Escondido drilled its first horizontal well in 2009 in Webb County. In just two years the company has drilled 29 more horizontal wells in the three counties – 18 in the upper Cretaceous Escondido formation, seven in the Olmos sandstone formation and five in the Eagle Ford shale formation. Escondido Resources has a substantial acreage position in the region which includes approximately 60,000 net acres in the shallow Escondido and Olmos formations, primarily in northern Webb County. The company also owns the rights to the deeper Eagle Ford shale formation in more than half of this acreage.

“Last year’s drilling program was focused on our ‘bread and butter’ Escondido and Olmos reservoirs, which are very economic and highly profitable for us, even in today’s low gas price environment”, said William E. Deupree, president and CEO of Escondido Resources II. “We also drilled an Eagle Ford shale well in northern Webb County that IP’d at 10 MMcf/d of rich gas and a second Eagle Ford well in northern Webb County that had extremely impressive log shows and will be fracture stimulated in March of this year. Escondido’s acreage position was strategically assembled to allow us to pursue multiple drilling objectives in the Escondido, Olmos and Eagle Ford shale. The results we’re achieving as we continue to drill horizontal wells in all of these reservoirs have continued to exceed our expectations.”

Meritage Midstream Services gathers rich gas for Escondido Resources through the Cuervo Creek Gathering System. The newly constructed rich gas pipeline provides multiple interconnects and numerous options for delivering liquids-rich natural gas to various regional processing markets. With more than 85 miles of 16-inch pipeline, the system has an initial capacity of 200 MMcf/d and is expected to expand alongside increased demand for gathering rich gas from shallow formations including the Escondido and Olmos.

“Pipeline capacity has been a formidable obstacle for producers working in deep and shallow horizons in South Texas,” said Deupree. “As our drilling program continues to expand it’s very important for Escondido Resources to have a midstream partner that’s willing to work with us to provide rapid access to multiple markets. Our relationship with Meritage Midstream plays a big role in our success.”

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