The Newkirk project, where Indago holds a 100% WI and 81.25% NRI in 4,049 acres, is located in Kay County, Oklahoma near Ponca City. The leases were largely acquired during 2015 with a three year primary term and two year bonus term. The project is located within the Mississippi Lime tight oil play, a relatively mature play in which hundreds of wells have been drilled in the past decade.
As reported previously, the main target Mississippian Lime (MSSP) is a carbonate formation which underlies a large portion of northern Oklahoma and southern Kansas. The play lies at shallow depth of 1200-2200m (4000-7000’) and is about 100m (300’) thick. Oil & gas is sourced from the underlying, highly prolific Woodford shale.
Reservoirs comprise the upper ‘Chat’ and lower ‘Solid’ members. The Chat is 12-15m (40-50’) thick and is typically high porosity with variable permeability. The underlying Solid displays low porosity with local higher porosity ‘sweet spots’.
Both MSSP reservoirs have been the focus of drilling and fracture simulated completions employing vertical wells since the 1940’s and horizontals since 2007. Initial flow rates for vertical wells average ~45 Bbls/day oil and ~80 Mcf/d gas. For horizontals, initial flow rates are highly variable dependant on how many ‘sweet spots’ are encountered. Wells produce significant salt water with low oil cuts, typically 10:1. Consequently, salt water disposal/injection (SWD) is an important consideration at the Newkirk Project.
While the board believes Indago’s leases are prospective for oil and gas, it should be noted that there is a paucity of modern wells in the immediate vicinity of Newkirk adding to the risks of exploration. An earlier review by Indago notes the project would present an attractive development when US domestic oil prices approach US$60/bbl.
It should also be noted that there is a risk that leases will commence to expire prior to the establishment of a commercial play as approximately 31% of leases expiry by the 30 September 2017, another 33% expire by the end of December 2017, the remainder expire during the last quarter of 2018.
Oil and gas leases held by Indago are contiguous with an additional 4,936 acres held by EEG. Under a Joint Operating Agreement, the two companies had agreed to the further development of the combined acreage (8,985 acres) on a 50/50 basis.
Proprietary 3D seismic survey targeting the Wilcox, Austin Chalk and Eagle Ford formations;
major phase oil, with some natural gas production.
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