Terrace Energy Corp. (TSXV: TZR.V, OTC: TCRRF) detailed updates on its STS Olmos development project, the company said Nov. 10.
The first three-well pad in the project, in McMullen and LaSalle counties, Texas, was completed. The STS Section 6 pad in McMullen had horizontal laterals of about 5,200 feet. These were drilled and cased in each well, which will be completed with zipper fracks, Terrace said.
Test results are expected in early December, and the company said the wells should perform similarly to the project’s seven completed delineation wells. These averaged 30-day IP rates of more than 1,000 barrels of oil equivalent per day (boe/d).
The STE Section 5 pad is the other three-well pad, in La Salle County. Terrace said that surface casing has been set on each well, at about 5,000 feet. Lateral drilling is ongoing on the STE 3-5H, the company added. Drilling is scheduled to finish in late December, and completions are scheduled for January, the company noted.
Construction is ongoing at the STS Section 17, the third multiwell pad. It will move to the site in December, to be developed as a six-well pad. The STS project contains about 145 gross potential drilling locations on about 17,000 gross mineral acres. Terrace plans additional rigs in 2015 and 2016, and its capital commitments are fully funded through its $75 million development drilling facility. It has a 27% working interest, the company said.
A projected outlook used the type curve model based on WTI pricing.The type curve model predicted a 50% internal rate of return (IRR) at $100 bbl/d, 41% IRR at $90 bbl/d, 32% IRR at $80 bbl/d and 23% IRR at $70/bbl/d.
“Based on the consistency of the historical production results to date, we expect this project to be the primary driver to continue building production volumes, reserves and asset value for the next several years. Additionally, we are working closely with our partner to optimize capital efficiencies, completion techniques and frack design with a goal of further enhancing well performance and economic returns,” said Dave Gibbs, president and CEO.
Terrace additionally said that the Quintanilla #1-H, the first well at the NW AWP Olmos development project, initially tested at 986 boe/d.The company holds a 33% working interest in 199 acres for this project, which is also funded through the development drilling facility.
Vancouver, British Columbia-based Terrace Energy develops and produces unconventional oil in the U.S.
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