RAM Energy Resources Announces Second Quarter Operational Update
16 Juli 2007 - 10:53PM
Business Wire
RAM Energy Resources, Inc. (Nasdaq: RAME) today announced an update
to operating activity that occurred during the second quarter of
2007. Highlights: RAM�s production for the second quarter was
approximately 330 thousand barrels of oil equivalent (BOE), an
increase of five percent sequentially from the first quarter 2007
production level. The first of the Barnett Shale wells proposed by
RAM to EOG Resources, Inc. this year, the Ashe C 1H, flowed at an
initial gross daily rate of 2.55 MMcfe (0.38 MMcfe net). Similarly,
the first Devon-operated well on jointly held Barnett Shale acreage
drilled during 2007, the T. L. Dickenson 1-H, flowed at an initial
gross daily rate of 4.30 MMcfe (1.23 MMcfe net). The initial
production rates posted by these two wells represent the best
initial production rates tested by the company in any of their
Barnett Shale wells to date. Consistent with RAM�s objective to
propose additional wells from its inventory of Barnett Shale
seismically identified locations, RAM has proposed a fifth well
targeting the Barnett Shale to EOG, the operator of the jointly
held acreage. EOG has notified RAM that it has elected to
participate as operator of the well. Non-acquisition capital
expenditures for the second quarter are estimated to have been $6.2
million, bringing 2007 year-to-date expenditures to $10.7 million,
approximately two percent above those in the comparable period of
2006. During the second quarter, RAM drilled or participated in the
drilling of 16 gross (16 net) development wells, of which 12 gross
(12 net) wells are capable of commercial production and four gross
(four net) wells which were drilling, testing or completing at the
end of the period. During the quarter, RAM also participated in
five gross (0.9 net) exploratory wells, of which two gross (0.4
net) are producing and three gross (0.5 net) were completing at the
end of the period. RAM drilled 16 wells, or slightly in excess of
an average of five wells per month, in its Electra/Burkburnett
field in North Texas during the second quarter, bringing total
wells drilled in the field this year to 30. The number of wells
drilled in the field in the quarter was negatively affected by the
unusual amount of rainfall experienced in the area, which hampered
the ability to move the drilling rig on a timely basis. In April
RAM raised its 2007 non-acquisition capital budget to $36.3
million, an increase of approximately 20 percent over the previous
budget of $30.3 million, due to the apparent increase in activity
in its Barnett Shale play. The current non-acquisition capital
budget for the year is 53 percent above 2006 non-acquisition
capital spent of $23.7 million. On May 15, the company completed an
acquisition of producing properties for a purchase price of $18.5
million. At the end of the second quarter, the properties were
producing an aggregate of 338 gross (281 net) BOE per day. Recent
Barnett Shale Activity RAM has an interest in Barnett Shale leases
covering 27,700 gross (6,800 net) acres in Jack and Wise Counties,
Texas with all the acreage held by production. Including the
recently completed Ashe C 1H and the T. L. Dickenson 1-H, RAM owns
an interest in 11 gross producing gas wells in the Barnett Shale.
The first of the Barnett Shale wells proposed by RAM to EOG
Resources this year was the Ashe C 1H. Recently the EOG-operated
Ashe C 1H well was completed and tested at an initial gross daily
production rate of 2.55 MMcfe (0.38 MMcfe net). Similarly the first
Devon-operated well of the current year to be drilled on jointly
held Barnett Shale acreage, the T. L. Dickenson 1-H, was also
recently completed and flowed at an initial gross daily rate of
4.30 MMcfe (1.23 MMcfe net). The initial production rates posted by
these two wells represent the best initial production rates tested
by the company in any of their Barnett Shale wells to date. Both
wells are continuing to recover frac fluids with the Ashe C 1H
currently producing at a gross daily rate of 1.1 MMcfe (0.16 MMcfe
net) and the T.L. Dickenson 1-H currently producing at a gross
daily rate of 2.78 MMcfe (0.80 MMcfe net). During the quarter, RAM
proposed its fifth well this year to EOG and other working interest
owners that jointly own interests with RAM in the company�s North
Texas Barnett Shale acreage and EOG recently elected to drill and
operate the well. The Dethloff #1H is proposed to be drilled to a
true vertical depth of approximately 7,000 feet with a lateral
length of approximately 2,800 feet to test the Lower Barnett Shale
formation. The proposed well is located in Wise County, Texas,
within the prolific Fort Worth Basin. Total estimated costs to
drill and complete the well are $3.2 million. If all parties elect
to participate in the drilling of the Dethloff #1H, RAM will own a
24 percent working interest in the well and will bear a like
percentage of the costs. RAM has made four previous well proposals
to date this year; in each case EOG has elected to participate,
drill and operate the proposed wells. Barnett Shale Project
Inventory Remains High In addition to the growing number of
producing wells, RAM�s project inventory for potential
near-to-intermediate term growth in its Barnett Shale play remains
substantial and includes five PUD drilling locations, 19 probable
seismic locations and eight possible seismic locations for a total
of 32 drilling locations identified. Many of these locations stem
from the company�s acquisition and ongoing seismic review of 35
square miles of 3-D seismic data over the last year. In addition,
RAM plans to acquire 50-60 square-miles of additional 3-D seismic
during 2007. In response to the apparent growth in activity, in
April RAM increased its allocated capital spending for drilling and
developmental activity on its Barnett Shale acreage to $10.0
million, or approximately 28 percent of its $36.3 million
non-acquisition capital expenditure budget for 2007. Including
$18.5 million paid for the recent acquisition of 120 wells located
in Southeast New Mexico and West Texas, RAM�s total capital
expenditure budget for the year is $54.8 million. Testing of Arkoma
Basin Wells Continues to be Encouraging Based on the successful
completion of the Chesapeake-operated Weyerhaeuser #5-22 and #6-22
wells as producers in the Arkoma Basin, during the fourth quarter
of 2006 and first quarter 2007 respectively, the company elected to
participate in the Weyerhaeuser #8-22 well, which was spud in the
first quarter and completed in the second quarter, and the
Weyerhaeuser #10-22 well, which was spud and completed in the
second quarter. These exploratory offset wells were drilled to aid
in defining the limits of the Jack Fork sands, which are
characterized by geologically complex faulting in this area. Each
of the Weyerhaeuser #8-22 and #10-22 wells tested at a stabilized
gross daily rate in excess of 3.5 MMcf (0.3 MMcf net). Current
gross daily production from the four wells totals approximately 9.7
MMcf (0.8 MMcf net). In addition, RAM has participated in the
Weyerhauser #9-22 well, which has been drilled to planned total
depth and is waiting on completion. RAM has a working interest of
11.7 percent in the wells drilled to date and a higher working
interest in surrounding blocks yet to be evaluated. The company is
also pursuing a potential exploratory drilling play in the
Mid-Continent area of Oklahoma. RAM, as operator, recently drilled
a well targeting the Redfork formation. The well was testing at the
end of the period. RAM�s Wolfcamp Shale Activity Update In RAM�s
15,000 acre Wolfcamp shale play in West Texas, activity is
continuing on the two vertical test wells drilled in the fourth
quarter of 2006. Earlier in the year, two of the three zones
thought to be potentially productive were fracture stimulated in
one of the wells. In early June, the third zone was also fracture
stimulated; the well is currently testing. In the other well,
testing of the first zone produced a small rate of gas; the
drilling results are currently under review. Both wells continue to
recover frac fluid. The company does not anticipate that it will be
able to predict whether such completion activities will result in
commercially productive wells until additional testing occurs.
Nevertheless, RAM has exercised its option to lease 9,835 net acres
in the play and plans to drill another test well during the second
half of 2007. Forward-Looking Statements This release includes
certain statements that may be deemed to be �forward-looking
statements� within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements in this release, other than
statements of historical facts, which address estimates of drilling
costs, capital spending, the possibility of reserve additions, the
election of other working interest owners to the Joint Operating
Agreement, to participate or not in a well, and events or
developments that RAM Energy Resources expects or believes are
forward-looking statements. Although RAM Energy Resources believes
the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees
of future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include oil and gas prices, exploitation
and exploration successes, actions taken and to be taken by the
government as a result of political and economic conditions,
continued availability of capital and financing, rig availability
and general economic, market or business conditions as well as
numerous other risk factors described from time-to-time in RAM
Energy Resources� periodic reports, proxy statements and other
information statements filed with the Securities and Exchange
Commission. RAM Energy Resources, Inc. is an independent energy
company engaged in the acquisition, exploitation, exploration, and
development of oil and gas properties and the marketing of natural
gas and crude oil. Company headquarters are in Tulsa, Oklahoma, and
its common shares are traded on the Nasdaq under the symbol RAME.
For additional information, visit the company website at
www.ramenergy.com.
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