Mr. Heinemann continued, “We were pleased to receive revisions to our project approval letter from the California Department of Oil and Gas and Geothermal Resources (DOGGR) in February, which, among other modifications, removed the requirement to cease cyclic steaming operations on wells located within 150 feet of a failed well bore until that well was either repaired or abandoned. Additionally, revisions in the administration of current regulations from DOGGR should reduce operational issues we had experienced. For example, shutting in production in proximity to a failed well bore exacerbated the stress on the surrounding wells and locally increased the incidence of additional failures. The requirement to shut in the surrounding wells reduced the number completions that we were able to bring back online. We are pleased that we now have a sufficient set of active completions in our cyclic operations going forward, although we do expect 2012 Diatomite production to be approximately 400 BOE/D behind schedule as a result of all these issues. We continue to expect total production to be within our guidance range of 38,000 - 39,000 BOE/D for 2012."
Production from the Company's next generation heavy oil projects, which include our McKittrick asset, averaged 1,510 BOE/D, a 19% increase from the fourth quarter of 2011. Drilling began at the Main Camp and Pan properties and the Company expects to drill approximately 40 wells here during the remainder of the year.
Mr. Heinemann added, “Production from the Permian was flat during the first quarter at 5,600 BOE/D. The Company entered the year with 800 BOE/D of production shut-in due to gas curtailment. We completed work during the quarter to install secondary outlets in our key operating areas, which should reduce curtailments going forward. We drilled 15 gross wells during the first quarter and expect to drill an additional 75 gross wells during the remainder of 2012. The Company acquired an additional 16,000 prospective acres in the Permian, bringing our total Permian acreage to 58,000 net acres. Plans are to drill four wells on the Company's prospective acreage outside the Wolfberry fairway during 2012 and evaluate those results by year-end. Production from the Company's Uinta properties was flat during the quarter, averaging 5,430 BOE/D. In the first quarter, the Company drilled 15 gross Uinta wells, all of which targeted higher oil potential areas, with a focus on drilling commingled Green River / Wasatch wells. The Green River / Wasatch wells we have recently completed are encouraging, with oil comprising approximately 80% of the production."
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts