Synergy expects to drill 102 gross Wattenberg wells
Synergy Resources (ticker: SYRG) announced its full-year 2017 production and capex guidance, as well as an operations update.
Synergy has identified over 1,000 gross drilling locations with mid to long laterals (~7,500′ to ~9,500′) across its consolidated Greeley Crescent (GC) acreage position. Based on current analysis, 20 to 24 wells per drilling spacing unit has been determined to be optimal well spacing design. This evaluation is ongoing and as a result of further analysis, acreage trades and potential acquisitions, the company expects the number of drilling locations to increase over time.
The 2017 preliminary budget is based upon a two rig program operating primarily inside the boundaries of the GC acreage. Because Synergy does not have substantial operational or near-term financial commitments, the company retains the operational and financial flexibility to reduce or accelerate activity in response to existing economic conditions, SYRG said in its press release.
During 2017, the company expects to drill 68 gross mid-length laterals and 34 gross long length laterals, spread across all three benches of the Niobrara as well as the Codell formations. During the same period Synergy expects to complete 52 gross mid-length laterals and 43 gross long-length laterals. The company projects an average working interest of 80% and an average net revenue interest of 64% for all wells drilled and completed in 2017.
Synergy expects oil gathering infrastructure to be built in advance of operations, significantly reducing truck traffic in and around operating areas. Management expects basin differentials to remain at approximately $10 per barrel until gross production exceeds its current pipeline commitments, at which time the differentials could be reduced as Synergy should have additional market optionality.
The preliminary lease operating expense guidance of $5-$5.50 per barrel of oil equivalent reflects the company’s expectation of ongoing remediation work on vertical wells as the Wattenberg Field continues to evolve toward horizontal development.
