One-rig program throughout 2018
Contango Oil & Gas (ticker: MCF) announced an update on its operations today, covering activity in its Permian acreage.
Contango expects it will maintain its current one-rig drilling program throughout 2018, now that it has de-risked much of its acreage position. The company believes it has over 400 locations split over three benches, the Upper 2nd Bone Spring, Wolfcamp A and Wolfcamp B, with further upside potential in other Wolfcamp and Bone Spring zones.
Permian completions ahead of schedule
Contango has managed to jump ahead in its completions schedule. The Crusader well was drilled in August, and was originally scheduled for fracturing in January 2018. The company’s frac provider had a window open up, though, which Contango took advantage of. Completions work began on Crusader on November 14th, and production should commence in the next few weeks. This will be Contango’s fifth producing well in the area.
Ragin Bull will be completed in January
Contango’s Ragin Bull well was spud on November 11th, targeting the Lower Wolfcamp A with a 10,000 foot lateral. Crusader’s accelerated completions means the Ragin Bull will now be completed in January, and should be producing by the end of the month.
Once Ragin Bull is drilled, Contango will begin drilling the River Rattler, which will be the company’s first Wolfcamp B well. Contango reports offset operators have run multiple Wolfcamp B tests recently, which have showed encouraging test results.
The company’s Gunner and Rude Ram wells continue to produce from the Wolfcamp A, and are still outperforming expectations. Contango reports it will continue to seek the optimum recipe for completions as it ramps up activities in the basin.
Contango also gave a reason for the spike in its trading volume on Wednesday. About three million Contango shares traded on Wednesday, more than 16 times the average day. According to the company this is due to two developments. “A significant shareholder liquidated their position due to it being the last investment in an old fund, and program trading as a result of Contango dropping out of the S&P SmallCap 600 Index due to market capitalization requirements.”
Markets responded very positively to Contango’s completions acceleration, and the stock closed up 21.3%.
