MDU Resources Group, Inc. (NYSE:MDU) has announced that its indirect wholly owned subsidiary, Fidelity Exploration & Production Company has completed a successful exploration test on its 75,000 net acres in the Paradox Basin. Following two weeks of production, the Cane Creek Unit No. 26-2H well was tested at a stabilized rate of 647 barrels of oil per day and 561 mcf of natural gas per day through a 7/64 inch choke with a flowing pressure exceeding 3400 psi. The well is flowing from a short unstimulated horizontal section. The well production rate is being significantly restricted to manage production operations, gather performance data and minimize natural gas flaring.
“This well is significant on its own and provides the basis from which we can establish a very large and profitable growth area for our company” said Kent Wells, president and chief executive officer of Fidelity. “The potential of this play appears significant and would make it a key component of Fidelity’s growth strategy as well as provide business opportunities for other MDU subsidiaries as it relates to pipelines and construction activity.”
Fidelity drilled the Cane Creek No. 26-2H well to a total depth of 8,685 feet, including a 1,945-foot lateral that was cased and subsequently perforated over a 116 foot interval at the end of the lateral. While it is too early to establish reserve potential for the well, a well drilled five miles to the southeast during the 1960s has produced over 1 million barrels of oil and a well seven miles northwest drilled in the 1990s has produced over 600,000 barrels of oil. Initial production rates from the 26-2H well are very encouraging; however, further data is required to give a reasonable estimate of ultimate recovery.
In addition, Fidelity has drilled its second horizontal Cane Creek well, the Cane Creek Unit No. 18-1H, to a total depth of 9,272 feet, including a 1,154-foot lateral. This well will be completed across a 900 foot horizontal interval and should be put on production during May. Fidelity plans to drill additional Paradox wells in 2012 to further advance the appraisal process and commence the development phase.