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Four New Wolfcamp A Wells Generate Exciting Rates

Stocks in this article: EGN

Energen Corporation (NYSE: EGN) has tested four new Wolfcamp A wells in the Permian Basin during the third quarter of 2013. All produced at attractive initial rates, and oil accounted for more than 50 percent of the product stream in each well. The Bodacious C7-19 #1H in eastern Reeves County produced at a peak 24-hour rate of 2,229 boepd, which is the highest initial production (IP) rate for a southern Delaware Wolfcamp well to have been publicly disclosed to date. [See locator maps at ]

“We are very pleased with our latest Wolfcamp results and increasingly excited about the potential success of this play not only in the Midland Basin but in the southern Delaware Basin, as well,” said James McManus, Energen’s chairman and chief executive officer. “We are looking forward in 2014 to accelerating the pace of Wolfcamp development in the Midland Basin, where we are seeing great consistency in Wolfcamp A results in Glasscock County, and to continuing the delineation of our sizeable acreage position in the southern Delaware Basin. With approximately 180,000 net Permian acres identified as having Wolfcamp potential, Energen’s unrisked drilling inventory could approach 5,300 locations (based on 80-acre spacing and 4,400-foot lateral lengths) if the play is successful on a large-scale basis.”

Non-Core Assets Held-for-Sale

Energen has classified its non-core North Louisiana/East Texas properties as held-for-sale effective September 30, 2013. At year-end 2012, proved reserves associated with these properties totaled 20.4 billion cubic feet equivalent (Bcfe), of which more than 98 percent are natural gas.

As a result, included in third quarter and year-to-date 2013 financial results is a write down of the book value of the North Louisiana/East Texas assets to the estimated fair value. This non-cash impairment charge is $24.6 million ($15.7 million after taxes, or $0.22 per diluted share) and is included in discontinued operations on the company’s income statement along with income from these properties and the company’s recently sold Black Warrior Basin assets.

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