Sundance raises $7.525m for US gas exploration
Posted: 24 October 2005
Sundance Energy Australia Limited raised $7.525 million for an oil and gas exploration program in Oklahoma, USA.
The funds were raised through a placement of 21,500,000 fully paid ordinary shares in Sundance Energy, at $0.35 per share, to institutional and sophisticated clients of Euroz Securities Limited. The issue of Placement Shares is conditional upon the approval of the existing shareholders of the Company in accordance with ASX Listing Rule 7.1 at the Annual General Meeting of Shareholders to be held on 27 October 2005 .
The placement represents a 6.7% discount to Sundance Energy’s last traded price of 37.5 cents per share on Tuesday last week ahead of a trading halt requested by the Company.
Proceeds from the Placement will be applied to:
- Further Sundance’s drilling program (including horizontal drilling) in the United States ;
- Strengthen Sundance’s cash reserves and increase its capacity to develop, evaluate and advance new projects; and,
- Augment its working capital requirements.
Horizontal drilling is the process of drilling and completing a well that commences as a vertical or inclined linear bore extending from the surface to a location above the target area, called the “kick-off point”.
The well bore then bears off on an arc to intersect the target area or reservoir at the “entry point”. After that, the bore continues at a near horizontal attitude tangent to the arc, to substantially or entirely remain within the reservoir until the desired bottom hole location is reached.
The prime objective is to expose significantly more reservoir rock to the well bore surface than can be achieved by drilling a conventional vertical well. Sundance Energy recently commenced drilling its first horizontal gas well in the United States – the Huffstutlar A 21-10 – the fourth well in a 6-8 well maiden exploration program by the Company in its Ashland Prospect. As at today’s date the well was drilling ahead at 3,935 feet (1,199 metres).
The first three wells in the Company’s U.S. 2005 drilling program were vertically drilled. The first of them appears to have frac stimulated out of zone, and is currently flowing back formation water. The Company believes that this well is a candidate for a horizontal Woodford Shale wellbore out of the cased hole. The second well was successfully fracture stimulated on 18 October 2005 , and is currently flowing back with good back pressure. The third well, which had good gas shows in both of its targeted formations as well as in an uphole zone, is scheduled for a fracture stimulation on 1 November 2005 .
“Based on the technical information gained in drilling vertical wells to date in Oklahoma, and industry trends in drilling in the Arkoma Basin, it is most beneficial to our shareholders to amend the existing vertical drilling program in order to embark immediately on the drilling of horizontal wells,” Sundance Energy’s Managing Director, Mr, Jayme McCoy said today.
“We believe successful outcomes to this exploration and production methodology will yield the highest possible return to shareholders,” Mr Binks, the Company’s Chairman, said.
For more information see www.sundanceenergy.com.au