AUSTRALIAN Stock Exchange-listed oil and gas junior Tomahawk Energy has commissioned its first oil well for commercial production in Oklahoma, in the US.
Based in Perth, the company listed last July and was originally focused on gas exploration in the area. The oil discovery and commercial production, therefore, was a bonus, according to chairman Tony Brennan.
Snell Heirs 9-13 is now producing at an average rate of 20 barrels of oil per day.
A Tomahawk statement said that, at current production rates and oil prices, the well would generate annual revenue of about $200,000 and have a payback time of less than a year.
The Snell Heirs 9-13 well was drilled in December 2004 as an offset or accelerator well to the discovery well bore, Snell Heirs 8-13.
The operator of the field is Tomahawk’s largest shareholder, New York-based Metro Energy.
It is understood the 9-13 well also has other hydrocarbon bearing zones that may be productive in the future.
This is largely attributable to the contiguous, low-risk nature of the Mississippi Caney shale project area, Mr Brennan said.
The oil revenue is in addition to five other gas producing wells, currently worth about $2.25 million a year to the company. In addition, the company owns four wells at various stages of preparation for production, with a further two wells drilled this year awaiting completion.
Those wells are the Snell Heirs 4-18 and the Snell Heirs 1-17, which also have oil and gas bearing zones that will potentially add to the company’s growing oil and gas production volumes.
After listing in July last year at 20 cents, the company’s share price rocketed to a high of $1.47 last October.
However, investors were not impressed by the commercial production news, with Tomahawk’s shares closing nearly 6 per cent lower at $1.18 following the announcement.
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