Earthstone Energy Inc., Denver, has acquired an additional 320 acres (24 net) in its previously announced horizontal Ratcliffe project in the Rush Mountain Field, Sheridan County, Montana. The project now contains a total of 2,600 gross acres (195 net) that could eventually be developed on 160-acre spacing; theoretically, a total of 16 wells.
Included in the acquisition is a working interest in two wells. One of the wells, the Hoffelt 2, is an existing vertical Gunton producer making approximately 16 barrels of oil per day. The second well, the F. Hoffeldt 1 SWD, is an existing salt water disposal well. In this transaction, Earthstone acquired a 7.5% working interest in both the leasehold and the wells for approximately $240,000. The project is operated by Vess Oil Corporation (Vess), a private, unrelated third party.
In related news, drilling on its previously announced horizontal Ratcliffe well, the Federal #1-5H, is progressing and casing has been set through the curved portion of the well. With the well now drilling horizontally in the Ratcliffe formation, results are encouraging. The well is projected to drill approximately 5,000 feet of horizontal lateral before drilling operations are concluded, possibly by early January. Earthstone previously announced it has committed to participate in the drilling of at least two horizontal Ratcliffe wells in this exploration project, the Federal #1-5H being the first of these wells. The Company estimates that its share of drilling and completion costs for the two wells will be approximately $1,000,000. Earthstone plans to fund all the above efforts with existing cash, its cash flow from operations and, if necessary, bank financing.
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