Big Sky Petroleum (CVE:BSP)(OTC:BGKYF) provided late Monday an operational update, saying it plans to continue to expand its leasehold position in the west Texas Permian Basin to a potential 10,000 net acreas by later this year, after capping what it called a "highly active and successful" first quarter.
The junior oil and gas play has been entirely focused on the establishment of a prospective leasehold position in front of the expanding Wolfcamp/Wolfberry play in the west Texas Permian Basin.
After reviewing and evaluating the eastern shelf of the Midland Basin, the company completed a leasing program that resulted in the acquisition of a contiguous 2,300 acres, and added another 1,100 net acres, to bring Big Sky's current leashold position in the Schleicher Prospect to 3,350 net operated acres.
It also in the first quarter drilled the initial Wolfberry test well, Schafer No.1, at its Midland Basin project in Schleicher County, Texas, recovering 348 barrels of oil and 1,266 million cubic feet of gas during the flow back period. The well, which was placed on pump in early April, will continue on pump until the remaining fluid is recovered, the company said, and then put on test for a period of 30 days to establish an initial production rate.
An NI 51-101 report by Petrotech Engineering estimates a "best" scenario of 100,000 barrels of oil equivalent recoverable net to Big Sky's interest in the Schafer No.1 well, potentially providing $4 million in net revenue per well after recovery of drilling costs, operating costs and production taxes.
Big Sky said in its release Monday that it currently has spacing for 84 vertical drilling locations, with a possible upside of 168 locations.
As such, in the second and third quarter, the company plans to continue its focused leasing program within the Schleicher Prospect area, with the main goal of consolidating its interest near existing leasehold positions - targeting what it calls "highly selective" areas for development.
Specifically, it is aiming to boost its leashold position in the area to a total of 10,000 net acres by the first half of the third quarter.
"Management is currently reviewing several options to fund this program including the possibility of entering into a joint venture with an industry partner," Big Sky said in the statement Monday.
Depending on the progress, the company said it could continue the leasing activity into early in the fourth quarter, but the main goal for the period will be to drill and complete another Schleicher Prospect test before the end of the year.
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