Gasfrac Energy: New Evidence Of Superior Production Results

| About: Gasfrac Energy (GSFVF)

I have written a few articles about Gasfrac Energy Services (OTC:GSFVF) and their waterless LPG fracking technology. For a quick introduction of the company and its technology, I strongly recommend reading the article I published on January 3rd 2012.

As indicated in my previous articles (here and here), Gasfrac Liquefied Petroleum Gas (LPG) or gelled propane fracking leads to a significant increase in oil and gas production in a number of hydrocarbon formations.

One such formation is the Cardium and Mannville formation at Ansell in Alberta. This is where Husky Energy (OTCPK:HUSKF) is undertaking its massive development of potentially 2600 well locations. Up until recently we inferred that Husky has picked Gasfrac LPG fracking due to better reservoir deliverability performance. However, specifics on production data were not made public.

The production data recently became public on the GeoScout industry database. On February 9th Alta Corp, a research firm based in Calgary, issued a research report highlighting the exact performance advantage of LPG fracking at Ansell in comparison to water/oil offset fracs. Needless to say the performance of LPG fracking is outstanding (both graphs are from Alta Corp report):

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As can be seen from the above, the 30, 60 and 90 days initial production rates are 50% to 80% higher than what you get with a conventional frac. This outperformance is confirmed over the long term cumulative production:

(Click to enlarge)

On February 1st in E&P Magazine, Gasfrac CEO Zeke Zeringue commented the following:

"We're creating much larger effective frac lengths than water fracs can," Zeringue said. "Our proppant is delivering a larger pay zone height, both initially and long term. Ninety-day IP is off the charts when compared to other methods because the fluid recovery is immediate, recapturable, reusable, and nearly 100%. We're able to create a fluid-free reservoir within days of stimulation, whereas water can stay in the reservoir for years and create flow-back blockage."

The performance at the Cardium/Mannville at Ansell seems to confirm that this is not just some marketing hyperbole by the company CEO, but actual results in the field fully corroborate his assertions.

It is important to highlight that Gasfrac is currently the only company offering LPG fracking. None of the major oil service providers such as Halliburton (NYSE:HAL), Schlumberger (NYSE:SLB) or Baker Hughes (NYSE:BHI) offer this technology despite some of them openly praising the process.

It is highly likely that Gasfrac will be acquired at some stage by a larger competitor. The technological, business and environmental benefits of LPG fracking offer a highly complementary product to any of the above mentioned companies' portfolio of fracking services.

Disclosure: I am long OTC:GSFVF.