Trio Petroleum Corp (NYSE American: TPET) (“Trio” or the “Company”), a California-based oil and gas company, provided updates on its HV-1 confirmation well (“HV-1”) and its HV-3A discovery well (“HV-3A”) in the Company’s South Salinas Project.
On December 27, the Company moved a rig onto location at its South Salinas Project to begin a workover of its HV-1 well, and subsequently the rig will move to its previously drilled HV-3A well. The Company estimates both wells should be producing on pump in mid- to late-January. A pumping unit and temporary facilities are already installed at the HV-1 well site and are now being reinstalled at the HV-3A well site.
The HV-1 was drilled as a two-mile step-out from the previously drilled HV-3A well. The HV-1 location was chosen based on interpretation of 3-D seismic data with the goal of better defining the magnitude of the Presidents Field located in the large 9,267 acre South Salinas Asset in which Trio owns an 85.75% working interest.
During the drilling and testing of the HV-1 well, the Company was excited by the oil shows and swab testing results of the Mid-Monterey-Clay, a zone previously not assigned any value in the Company’s reserve report, but which swab tested at rates of up to approximately 125 barrels of oil per day (“BOPD”). The swabbing operations were short-term and are not necessarily indicative of long-term production capacity and, therefore, the Company plans to further test the zone by putting it on pump and producing from this new zone. The Company believes production from this zone will further increase the reserves and PUDs of the Company’s current approximate $2 billion PV(10) reserve value. The workover of the HV-1 well will isolate existing perforations in the Mid-Monterey-Clay at 6,390-6,560 feet depth (170 feet of perforations) from perforations in shallower zones, allowing the Company to then production test the Mid-Monterey-Clay by putting it on pump.
Recently, Company management revisited the exploration permit for the HV-3A well and determined that production of the well could resume, and that a majority of the permitted eighteen-month test-period remains. This unexpected, but very favorable, outcome enables the Company to produce from two wells, the HV-1 and HV-3A, much earlier than expected. The Company is currently improving the road to the HV-3A well site, reinstalling temporary facilities, and putting the well back on pump. There are currently 250 feet of open perforations in the HV-3A well, of which 125 feet are in the Yellow Zone and 125 feet are above the Yellow Zone in the Upper-Monterey-Clay.
Earlier production testing on pump of these same HV-3A perforations recovered 18.5° to 22.4° API gravity oil at rates up to 154 BOPD, with the average over the final two weeks being 33 BOPD plus 86 barrels of water per day (“BWPD”). The future production of the HV-3A well could be improved as the perforations have not yet been acidized for borehole-cleanup and there are significant behind-pipe intervals in the well that have not yet been perforated. The Company intends to production test the existing open perforations on pump and to then take steps, as may be appropriate, to increase oil and gas production at the well, such as acidizing for borehole-cleanup, adding new perforations, and/or opening existing deeper perforations that previously produced oil and that are currently below bridge plugs.
Trio’s CEO, Michael Peterson, stated: As I stepped into the CEO role I was very sensitive to the amount of time it was taking to properly test the HV-1 well and attempt to bring it into production. We are extremely pleased to not only be able to commence the production of the Mid-Monterey-Clay Zone in the HV-1 well, but also to be able to announce restarting production at the HV-3A well, putting us ahead of our development plan. We continue to evaluate and pursue additional development opportunities within our South Salinas Project and our McCool Ranch Field, as well as potential accretive acquisitions outside these projects, as we work to diversify our asset base and drive increased production and cash flow. We look forward to providing additional announcements relating to the South Salinas Project, the McCool Ranch Field and other key developments as they arise.
