Investors are taking note, with the company's shares up 50% since mid-February 2014, which has been helped by strong production at Atzam #4 of 170 bopd.
Highlighting the prospectivity of the Atzam #5 well, it is located just 1 kilometre southeast of Atzam-4.
Citation said that the Atzam #5 well is now expected to drill through the C13 carbonates from approximately 1,800 feet in the next 24 hours and is expected to reach the well's planned total depth within 4 weeks.
The company has outlined the well plan which is to drill to the top of the C18 reservoir section and set 9 5/8 inch production casing, then drill ahead to the planned TD of 4,100 feet to open hole test the C18 and C19 primary reservoir sections.
As the well has drilled ahead during the week, background gas shows have increased from 1% to now approximately 15% as the well approaches the top of the C13 section, together with increased oil spotting across the shakers and in the mud tanks.
The Atzam #5 well was drilled down to 1,246 feet where the Operator (Latin American Resources) successfully set and cemented the first intermediate 13 3/8 inch casing string in the well. This was a critical operational phase successfully completed by the Operator due to the complex limestone geology present down to the top of the carbonate units.
Atzam #4 Production Continues At 170 BOPD
The Atzam #4 production well continues to produce at approximately 170 bopd whilst maintaining a flowing tubing pressure over 200 psi following the Operator increasing the choke to 18/64ths (from 16/64ths) in February.
The production performance from this 6 foot perforated section in the C17 reservoir over the past 8 months is very encouraging with production continuing without any associated water to date.
Recent downhole reservoir pressure testing data has confirmed that the strength of the reservoir energy from this producing 6 foot perforated section in the C17 carbonate.
The shut in downhole pressure testing recorded in excess of 500 psi, only slightly lower than the virgin reservoir pressure recorded on perforating this section in June 2013. Following the recent testing program, an initial independent report on this 6 foot producing zone has increased the potential recoverable reserves to 325,000 barrels of oil.
The well continues to produce from natural reservoir pressure without the need for a submersible pump to assist flow rates, which is usually required for producing these carbonate reservoirs.
The well production plan is to continue increasing the choke over a period of time to establish the optimal production rate for this producing carbonate section.
Citation has been attracting investor and broker attention, and has a Speculative Buy recommendation from Argonaut Equity Research with a price target of $0.046.
Highlighting the potential upside of this target, it is over three times higher that Citation's last traded price of $0.015.
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