PEDEVCO
Corp. (dba Pacific Energy Development), which has an established 18.5k plus
acre footprint in the U.S. spanning the Niobrara (27.13% WI on 10k+ acres in
Colorado’s Denver-Julesburg Basin), Mississippian Lime (98% WI on some 7k acres
in Kansas), and Eagle Ford (1.3k acres in Texas’ Leighton Field), reported some
solid news today out of their Asian development interests, as favorable initial
test results came in on the #315 well in Kazakhstan’s East Zhagabulak field
from operator Aral Petroleum Capital, in which PED is currently contracting to
acquire an indirect 34% interest.
Production
from the #315, which was originally drilled back in 2012, has been excellent,
mirroring recent success with the first workover in this four well program that
Aral has slated, when the #306 tested around 579 BOEPD back in November. In
fact, testing on #315 of the initial target interval has been so good, running
some 628 BOEPD over the first three days, that Aral decided to just skip
testing the other two intervals and tied the well directly into production as
of Dec. 4, leaving plenty of exploration for the remainder of the program.
This
is a key opportunity for PED and represents their first chance at acquiring
sizeable participation in a major international play that has plenty of
long-term potential. The field sits in western Kazakhstan’s Pre-Caspian Basin
and with a flurry of activity in recent months meeting with success in the
western portion of the Zhagabulak field (identifying 22 horizons of varying
thickness in the KT-I and KT-II carbonate zones), the favorable results
reported today shed positive light on the potential of the similar oil bearing
formations in East Zhagabulak. The North Block as a whole contains a whopping
380k acres of contract area covered by a 100% Aral-owned exploration license,
issued by the Republic of Kazakhstan and they have a firm production license on
the East Zhagabulak.
The
obvious production potential from these results pairs up nicely with the
proximity of the North Block to an array prolific operators in what is now one
of Kazakhstan’s top producing basins (Chevron has the two largest fields) and
one can easily see the logistical advantages which will spring board this
asset’s development. Aral will be going back in to frac and acidize the KT-1
interval via the previously tested well #316 next, which struck oil back in
2012 in the West Zhagabulak (net pay zone aggregating some 606 feet), before
they turn to the #308 well (potential net pay of some 388 feet) to test certain
upper objectives.
President
and CEO of PED, Frank Ingriselli, underscoring the extent to which the last two
months of results from wells #306 and #315 have bolstered production from the
asset, conveyed the company’s enthusiasm over getting to close the Aral deal
soon, clearly impressed by the test results from the first interval, with two
more wells yet left in the program to be worked over. This asset is rapidly
emerging as a strong international footing for PED, superbly complementing
their domestic footprint in established U.S. plays and promises shareholders a
bright future with tremendous long-term upside potential. Investors will want
to keep a close eye on PED as the Zhagabulak field asset develops, especially considering
consumption projections from the recent EIA short-term energy outlook report
(Dec 10). China’s liquid fuels consumption is set to climb by 400k barrels per
day in 2014 (on top of an estimated 380k bbls/day increase for this year over
the 2012 figures) and a looming heating oil shortage this winter possible in
OECD countries underscores the consistency of global demand, as regional middle
distillate inventory coverage in North America for instance looks sufficient
for only 28.6 days of forward demand, a full 4.3 days under the five-year
average.
More
info on Pacific Energy Development is available at
www.PacificEnergyDevelopment.com
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