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Sanchez Update - St. Davis Reported

Posted by bernell on December 10, 2014

Sanchez Energy had a general operational press release today.

Included in it were the results of the St. Davis #1, its 2nd TMS well located in a triangle area between Gloster, Centreville and Liberty in Amite County.

Also reported was information on the Morris #2H, located west of Woodville.

Here is the pertinent information on this news release regarding the TMS:

"In the TMS, the St. Davis #1H has commenced flowback and achieved a peak 24-hour production rate of 1,143 BOE/D and a 30-day production rate of approximately 920 BOE/D (91% liquids). The normalized initial production rates seen on the well are among the best rates observed in the TMS at 204 barrels of oil per thousand lateral feet. The well was drilled with an approximate 5,600 foot lateral above the "rubble zone" and was fracked with 25 stages. It is currently producing on an 18/64 choke.

Activity in the 50/50 TMS joint venture between privately held Sanchez Resources and SN includes the completion of the Morris #2H well inWilkinson County, Mississippi, which was drilled with a 6,450 foot lateral in the upper TMS and is expected to commence production in late December. The joint venture currently holds in excess of 110,000 net acres in the core of the play.

The success of the St. Davis well is in part due to the placement of the lateral above the TMS "rubble zone" which SN believes, due to sand and silt deposition, provides for shallower declines and a higher b-factor relative to the lower section targeted TMS wells. SN remains positive on the long-term potential of the TMS, particularly given expected declining costs and high netbacks due to the high percentage of oil in the production stream which is sold based on LLS pricing."

And, here is a link to the full news release:

At 837 barrels of oil per day for the first 30 days, this is a good well and much better than the results from its first well, the Dry Fork Creek East.  That said, these results are a bit below those experienced by EnCana and Goodrich of late. 

It would appear the lower productivity is due to drilling in the landing zone above the TMS "Rubble Zone."

Their reasoning is that, first, the decline rate they are expecting will be better and, second, they believe long term issues from the intrusion of water from the Lower Tuscaloosa Sands, located just beneath the TMS, will not be an issue. 

Sanchez believes well drilled below the Rubble Zone will eventually experience issues from water.

Time will tell.

What do you think about it?