HOUSTON, Oct. 23 /PRNewswire-FirstCall/ -- GeoResources, Inc., (Nasdaq: GEOI - News), today announced its current capital expenditure budget and further provided an operations update on its activities. At present, the Company''s daily production totals exceed 3,400 BOE per day including the properties acquired on October 16, 2007, as previously announced.
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Capital Budget
The Company has established a capital expenditure budget of approximately $40 million, exclusive of possible development expenditures associated with exploratory success, as follows:
Horizontal Drilling: ($millions) Rockies and Williston areas $ 5.3 Texas $ 6.2 Conventional Drilling $ 3.4 Water flood $ 7.1 Exploratory drilling (1) $ 6.0 Re-engineering (2) $ 7.0 Other (3) $ 5.0 (1) Includes both conventional and horizontal drilling projects. (2) Includes activities related to existing fields intended to lower operating expenses and enhance production attributes by lowering decline rates and downtime. Such expenditures include expenditures related to facilities, compression, down-hole lift methods, recompletions and side-track drilling. (3) Includes estimated acreage and seismic costs.
The budget is subject to change as the Company reevaluates alternative projects in connection with its recent major acquisition and further expands its portfolio. The Company expects that the majority of expenditures will occur during the remainder of 2007 and 2008, but certain projects may extend into 2009, specifically including, acreage acquisition, projected water flood and horizontal drilling projects. This budget may be accelerated pending drilling and service rig availability and adequate staffing to effectively manage activities and control costs. In addition, certain expenditures may be deferred in favor of new opportunities.
Operations Update:
Texas:
The Tom Haynie Unit #1H, located in Grimes County, Texas, has been successfully completed and placed on production. The well was drilled to a total measured depth of 19,883 feet, including a vertical depth of 13,996 feet and a horizontal leg of 6,166 feet and has averaged 17.3 MMCFPD over the initial 12 days of production. The Company also commenced drilling the W. Richards Unit #1H, which will be its first dual horizontal lateral. This well is expected to be completed in December 2007. The Company has acquired additional acreage, is in the process of permitting additional drilling locations and, based on continued technical review and well performance, intends to retain the current drilling rig and crew and spud a new well approximately every 60 days for the next two or three years. The Company is the operator of the wells and holds a direct 7.2% working interest and a 2% general partner interest in an affiliated partnership, which holds an 82.8% working interest. The 2% general partner interest increases to 35%, pending partnership payout plus a specified rate of return.
North Dakota:
In North Dakota, the Company has expanded its Bakken Shale acreage position with its joint venture partner, Slawson Exploration Company, Inc., to include a 10%-15% working interest in approximately 38,000 gross (26,000 net) acres in Mountrail County. The acreage includes leases in proximity to significant discoveries by large independent operators. The Company and its partners currently have minor interests in three wells that have or will likely commence drilling operations prior to the end of the fourth quarter of 2007. Further, the Company and joint owners expect to spud a horizontal well in the first quarter of 2008 depending on drilling results of other wells in the vicinity and rig availability. In addition, the Company has filed an application with the appropriate regulatory agencies to approve a 6,600 acre secondary oil recovery (water flood) unit in the Starbuck Field in Bottineau County. The Company expects regulatory agency approval and has plans to begin drilling the first five water injection wells later in the fourth quarter of 2007. The Company has already initiated work on existing wells and facilities in the field that will be part of the water flood. Subject to final unitization approval, the Company expects to own about 90% working interest in the Starbuck Madison Unit and plans to initiate water injection before year-end 2007. The Company also submitted permit applications for two horizontal wells in the Wayne Field in Bottineau County in existing oil reservoirs. These development wells, the Ballantyne-State/Steinhaus H2 and the Oscar Fossum H5, are scheduled to spud before year-end. The Company owns a 100% working interest in the Ballantyne-State Steinhaus H2 and a 67% working interest in the Oscar Fossum H5.
Louisiana:
In Lafourche Parish, Louisiana the Company has begun work to prepare its Dupuy prospect for drilling. The prospect includes two wells and the first well is expected to spud in November. Immediately thereafter, the Company expects to spud the first of two possible wells in its adjacent Moore Prospect. The Company has a 10% working interest in Dupuy and a 5% working interest in Moore and will operate both prospects. Both prospects are located in the Raceland Field and will be directionally drilled for oil objectives above 9,000 feet. These prospects were assembled and promoted to third parties, by Southern Bay Energy, a wholly owned subsidiary, prior to its merger with the Company. The Company may acquire additional interests in these prospects and expects to retain larger interests in future drilling projects along the Texas and Louisiana Gulf Coast.
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