Molopo Energy Limited
ASX : MPO

September 03, 2012 07:00 ET

Molopo Energy Limited: August 2012 Operational Update First Barnhart Well Meets Expectations

CALGARY, ALBERTA--(Marketwire - Sept. 3, 2012) - Molopo Energy Limited ("Molopo" or "the Company") (ASX:MPO)

Highlights

Texas, USA

  • Preliminary results from Molopo's first well in the Barnhart project area, Linthicum Washington 36-2H, were announced on 30 August and met expectations. The well produced oil more quickly than offset wells in the area and has shown encouraging oil rates.
  • Molopo has spudded its second Barnhart well at Linthicum Washington 36-1H and is drilling ahead at approximately 8,800 feet.
  • Completion is underway on Molopo's Baggett 16-1H well in the Fiesta Project area, with flow back expected in early to mid-September.
  • Baggett 40-2H well in Fiesta (8,234 foot lateral) was drilled and completion is scheduled to commence during the second week of September.

Saskatchewan, Canada

  • The Roche Percee 9-26 well (Molopo 25% net interest) completed and is currently producing approximately 180 bopd gross (barrels of oil per day).

Company Production

  • Corporate sales in July 2012 were 285 boepd (barrels of oil equivalent per day) compared to 400 boepd during June. The difference is attributable to higher than anticipated decline rates in Saskatchewan and lower than expected performance from the initial three producing wells in the Fiesta Project in Texas. The initial Fiesta wells were drilled with a shorter radius and were completed using techniques and materials that did not prove optimal for the characteristics of the well. This has been modified in the drilling and completing of the subsequent wells in the Fiesta area, and improvements will continue to be made as additional data from the wells becomes available.
  • Sales for July by product were as follows: crude oil: 81%; natural gas liquids: 8%; and natural gas: 11%.

Queensland Asset Divestment

  • Molopo announced on 1 August 2012 that it had entered into an agreement for the sale of its Queensland Coal Bed Methane assets to a wholly owned subsidiary of PetroChina International Investment Company Limited for a total consideration of $41 million, plus a $2.4 million adjustment for working capital. Closing is subject to Australian and Chinese regulatory review, and is expected to occur by early November.

Outlook

  • In Texas, the plan to drill one well per month is on track with Molopo's dedicated contract drilling rig.
  • Three additional wells have been licensed in Fiesta. In Barnhart, the Company is proceeding to license two wells.

Wolfcamp Horizontal Development, Permian Basin, Texas

Fiesta Project

Completion of Molopo's Baggett 16-1H well in the Fiesta Project area commenced during August with flow back results expected in early to mid-September. The Baggett 40-2H well (8,234 foot lateral) was drilled in Fiesta and completion is expected to commence during the second week of September. Further analysis of core data from Baggett 16-1H from Benches A, B and C has encouraging results with definite confirmation of being in the oil window. Permeability and oil saturations indicate that Bench B and C are as prospective as Bench A.

Barnhart Project

The Linthicum Washington 36-2H horizontal well was drilled with a lateral of approx. 7,500 feet into the Wolfcamp Bench B. As announced on 30 August 2012, the well was put on gas lift on 12 August 2012 and results are encouraging as the well continues to clean up. Evaluation of the well performance continues.

Midale exploration/Bakken production, Saskatchewan, Canada

The Roche Percee 9-26 well targeting the Bakken completed in July and is currently producing 180 bopd (gross). Molopo has a 25% net interest in this well. A thorough evaluation of the future potential exploration and development activity in Saskatchewan is ongoing to ensure optimal capital deployment.

New Well Summary1
Well Well type
Project area
Primary target
Working Interest Progress/Status Completion Date
([Anticipated] / Actual)
Williston Basin, Saskatchewan, Canada
Roche Percee 9-26 Oil Exploration
Estevan
Bakken
25%
Non-Op
On production July 2012
Permian Basin, Texas
Linthicum Washington 36-2H Oil Exploration
Barnhart project
Wolfcamp B
100%
Operated
Drilled with a lateral approx. 7,500 feet; Flowing July 2012
Baggett 16 -1H Oil Exploration
Fiesta project
Wolfcamp A
100%
Operated
Drilled with a lateral approx. 7,500 feet; fracced with 34 stages and completion continues August 2012
Baggett 40-2H Oil Exploration
Fiesta project
Wolfcamp A
100%
Operated
Drilled with a lateral approx. 8,200 feet; Awaiting completion [September 2012]
Linthicum Washington 36-1H Oil Exploration
Fiesta project
Wolfcamp A
100%
Operated
Spud on 20 August; Drilling ahead at a depth of approx. 8,800 feet [October 2012]
1Includes all wells currently drilling or recently completed/being brought on production.

This press release contains certain forward-looking statements. These statements relate to future events or future performance of the Company. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "predict", "seek", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to certain events, and are subject to a number of risks, uncertainties and assumptions. Many factors could cause Molopo's actual results, performance, or achievements to materially differ from those described in this press release. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in other public disclosures made by the Company or this press release as intended, planned, anticipated, believed, estimated, or expected. Furthermore, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be produced profitably in the future. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary declaration. These statements speak only as of the date of this press release. The Company does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.

Issued by: Molopo Energy Limited

Molopo Energy Limited is an ASX-listed oil and gas exploration and production company. The company is focussed on the development of its shale oil resource play in the Permian Basin, Texas, USA. The company also has unconventional oil assets in the Williston Basin, Saskatchewan, Canada, shale gas assets in Quebec, Canada, a CBM project in Australia (under divestment) and onshore gas projects in South Africa.

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