Samson Oil & Gas Limited (ASX: SSN)(NYSE MKT: SSN) provides an advisory.
North Stockyard Oilfield, Williston Basin, North Dakota
Samson has owned an equity position in the North Stockyard Oilfield for several years and has participated in the drilling of six Bakken Formation wells along with a Mission Canyon Formation well. The six Section area, (three Sections are designated as the Northern Tier, and three Sections the Southern Tier) has been developed with a 640 acre spacing utilizing 5,000 foot laterals. Standard industry practice has evolved and the norm is to develop the Middle Bakken and the First bench of the Three Forks Formation at 160 acre spacing. Samson has been keen to develop the North Stockyard field to this drilling density; however, several of the other working interest owners in the field, including the Operator, do not wish to accelerate the development of this field at the optimal acreage spacing.
As a consequence, Samson and the Operator group have negotiated an acreage swap for the Middle Bakken/First Bench of the Three Forks (MB/TF), whereby Samson will acquire these parties’ undeveloped acres in the Northern Tier and will divest undeveloped acres in the Southern Tier. After the swap, Samson will own 64% and 57%, respectively, in the two overlapping 1,280 acre spacing units located in the Northern Tier. Samson will become Operator for the entire Northern Tier. Samson will retain its existing equity in the seven producing wells and the deeper benches of the Three Forks in both the Northern Tier and the Southern Tier. The formal agreement documenting the swap has been completed and was executed by Samson and the Operator today.
Samson has appeared in front of the North Dakota Industrial Commission (NDIC) and requested a 160 acre spacing order in the Northern Tier. Samson expects that this request, which was unopposed, will be approved and that the NDIC will consent to the drilling permits that have already been lodged. This administrative step will then allow Samson to drill an additional 14 wells in the Northern Tier to develop the MB/TF to a 160 acre spacing.