Sterling: Breagh A07 well results exceed expectations

Sterling Resources Ltd. has announced that fracture stimulation and production testing of Breagh well A07, in the southern sector of the UK North Sea, have been successfully completed.

After several days of flowing the well to clean it up, the well was production tested at a stabilized rate of 32 million standard cubic feet per day (100 percent) at the planned initial operating conditions of the well. The performance achieved under these conditions represents an estimated two to three-fold increase in production rates over what would have been expected if the well had been completed with the standard completion used in the Breagh field to date. The well will now be tied into production over the summer in parallel with the drilling of well A08, which should commence within the next two weeks.

The A07 well was drilled during the fourth quarter of 2013 to a location approximately 2 kilometres to the south-east of the Alpha platform, encountering 100 feet of net pay in two separate zones. The well was suspended in early January 2014 to release the ENSCO 70 drilling rig for a planned period of maintenance and upgrade. The rig arrived back on location at Breagh in early May and re-entered A07 to start operations with the assistance of the Schlumberger Big Orange XVIII well-stimulation vessel.

Fracture stimulations were performed over the two reservoir zones, Zone 1, which is the main productive zone and reserves base in the Breagh field, and Zone 3, which Sterling currently classifies as contingent resources. A total of 179,500 pounds of proppant was pumped. The estimated overall cost of the fracture treatment is approximately US$10 million (100 percent interest), or US$3 million net to Sterling.

“These results have exceeded our expectations,” stated John Rapach, Chief Operating Officer for Sterling Resources. “We achieved a marked improvement on Zone 1 production rates. The results are also very relevant for the Phase 2 development of Breagh on which we continue to work with Operator RWE Dea to firm up the plans for submission of a Field Development Plan Addendum,” added Rapach.

Jake Ulrich, Chief Executive Officer for Sterling Resources, also commented, “After the lower than expected initial rate from some of the Breagh wells and the delays in production due to the unplanned shut-ins, it is particularly pleasing to announce an excellent result with the first fracture stimulation. This will have significant positive implications for the ongoing development of the Breagh field and the future cash flow that we expect to receive.”