Otto Energy's F5-ST Bypass Well Begins Production in Gulf of Mexico
OEL (OEL) Share Update December 2024 Tuesday 17th
Otto Energy Reports Initial Production from F5-ST Bypass Well
Otto Energy Limited (ASX: OEL) has announced the commencement of production from its F5-ST Bypass well located in the South Marsh Island 71 lease, operated by Byron Energy Inc. This marks a significant step in the company's operations in the Gulf of Mexico.
Instant Summary:
- Production commenced on 30 November 2024.
- Initial flowback averaged 1.2 MMscf/d of gas and 4 bbl/d of oil.
- Peak production reached 4.1 MMscf/d of gas and 17 bbl/d of oil.
- Future production plans target 2.5 – 3 MMscf/d of gas.
- Otto Energy and Byron Energy hold equal stakes in the SM 71 lease.
Production Details
Otto Energy Limited has successfully initiated production from the F5-ST Bypass well, which is part of the South Marsh Island 71 lease in the Gulf of Mexico. The well, operated by Byron Energy Inc., began producing on 30 November 2024. During the first eight days, the well averaged a production rate of 1.2 million standard cubic feet per day (MMscf/d) of gas and 4 barrels per day (bbl/d) of oil, using a conservative choke setting.
On 12 December 2024, the production was increased on a larger choke, achieving a peak rate of 4.1 MMscf/d of gas and 17 bbl/d of oil. This rate was constrained by the platform's gas compressor capacity. The company plans to maintain a production rate between 2.5 and 3 MMscf/d of gas, balancing output from both the F1 and F5 wells.
Technical Insights
To better understand the production dynamics, Otto Energy conducted a wireline program to measure bottom hole pressure and temperature. The data suggests that the F5-ST Bypass well has intersected a gas-bearing reservoir, with potential for an oil column near the base. The pressure data indicates a connection between the F1 and F5 wells, though complexities in the reservoir remain.
Both wells have returned to stable production, with the F1 well producing 1000 bbl/d of oil and 500 Mcf/d of gas, and the F5 well producing 10 bbl/d of oil and 3.0 MMscf/d of gas, limited by compressor capacity.
The commencement of production from the F5-ST Bypass well is a positive development for Otto Energy, potentially increasing its revenue from the Gulf of Mexico operations. The initial results are promising, but the company has cautioned that it is too early to predict long-term production potential with certainty. The market may react positively to the news, but investors should remain cautious until more data is available.
Investor Reaction:
Analysts are likely to view the initial production results as a positive step for Otto Energy, given the potential for increased gas and oil output. However, the uncertainty surrounding the long-term production potential may temper enthusiasm. Investors will be keen to see further updates as more data becomes available.
Conclusion:
Otto Energy's announcement of the F5-ST Bypass well's production start is a significant milestone. Investors should watch for future updates on production rates and reservoir analysis to gauge the well's long-term potential. Staying informed on developments in the Gulf of Mexico will be crucial for making informed investment decisions.