Permian Basin-focused HNR Acquisition Corp (HNRA) has announced a significant increase in potential untapped oil in the Grayburg and San Andres oil zones.
The Houston-based company said in a news release that there could be potentially 34 million barrels of oil that can be accessed in the Grayburg-Jackson Field by simply adding perforations to existing wells in its leasehold. This is in addition to previously announced proven reserves, HNRA noted.
The proven oil reserves of over 15 million barrels, combined with the potential 34 million additional barrels from the Grayburg and San Andres zones, will produce oil and a revenue stream for more than two decades at a slow decline rate, HNRA said.
The Grayburg-Jackson field, which has proven reserves of approximately 15.4 million barrels of oil and 3.5 billion cubic feet of natural gas, is currently producing crude oil and natural gas from waterflood operations primarily from the Seven Rivers zone. Third-party engineers Cobb and Associates have updated HNRA’s reserve report for the end of 2023, according to the release.
The Grayburg-Jackson field is located on 13,700 leasehold acres in Eddy County, New Mexico. The company has oil and gas rights to the Seven Rivers, Queen, Grayburg and San Andres intervals. The mapped original-oil-in-place (OOIP) is approximately 876 million barrels of oil in the Grayburg and San Andres intervals and 80 million barrels from the Seven Rivers interval for a total OOIP of approximately 956 million barrels of oil, HNRA said.
"We believe that based on historical perforations, only 44 percent of the Grayburg-San Andres had been tapped”, HNRA Vice President of Operations Jesse Allen said. "With continued waterflood optimization, adequate uniform injection and infill drilling of 10-acre well spacing in the Seven Rivers, and now with increased drilling in the Grayburg-San Andres sands, HNRA could see a significant increase in daily production that will lead to record levels of revenue and earnings”.
"When we acquired the Grayburg-Jackson field through the purchase of LH Operating, LLC, our team felt there was upside potential to increase the value of the property by increasing well spacing and by modernizing and enhancing maintenance of the field", HNRA Chairman Joseph Salvucci, Sr. said. "After completing the analysis, we are exploring the recovery of so much additional potential oil to be achieved through our existing operations. The additional 34 million barrels of oil recovery is certainly a game changer, not only for the company but for the shareholders, as it will add significant value and will increase revenue and earnings for years to come”.
Employing a “dual path analysis”, HNRA said it is focused on maximizing short-term and long-term production in the Seven Rivers zone, as well as assessing the best approach to recover oil from the Grayburg and San Andres zones.
HNRA describes itself as an independent upstream energy company focused on maximizing total returns to its shareholders through the development of onshore oil and natural gas properties in the USA. The company said its long-term goal is to “maximize total shareholder value from a diversified portfolio of long-life oil and natural gas properties built through acquisition and through selective development, production enhancement, and other exploitation efforts on its oil and natural gas properties”.
In November 2023, HNRA acquired its operating entity, LH Operating, LLC, whose assets include interests in the Grayburg-Jackson oil field in the Permian Basin in Eddy County, New Mexico.
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