Sugarloaf project stakeholders Empyrean Energy has embraced positive second quarter results for the Texas site exploration by operator Marathon Oil.
The American oil and gas exploration and production company is currently evaluating the Eagle Ford shale at the Austin Chalk and Pearsall formations.
It has so far completed four Austin Chalk wells, which recorded an initial production rates of 980 barrels of oil equivalent per day.
The findings from early Austin Chalk production also suggest the mix of crude oil, condensate and gas deposits to be similar to Eagle Ford condensate wells.
Marathon have looked at downspacing to 40- and 60-acre units, subject to the results of downspacing pilots due in December this year.
“These early stage observations from Marathon are very encouraging and if the Austin Chalk and Pearsall formations, from which Marathon is currently evaluating initial production rates prove to be worthy of development across the Sugarloaf AMI then Empyrean is likely to see a positive impact on its reserves and fundamental value,” said Tom Kelly, chief executive at Empyrean.
“In addition, downspacing could provide a further positive boost to the project and Marathon has already identified additional formations such as the Buda and Wilcox that have exciting additional potential to test in the future.
“In light of Marathon’s update we particularly anticipate receiving the results from the two Austin Chalk wells participated in by Empyrean and which commenced production during July 2013.”
Empyrean holds a 3% working interest in the Sugarloaf project.