Venoco notes Monterey shale exploration status

By OGJ editors
HOUSTON, Nov. 2
-- Success in exploring for oil in Miocene Monterey shale onshore and off California won’t be measured by any one well, said Venoco Inc., Denver.

Venoco will spend $100 million in 2011 for onshore Monterey work, drilling 22 horizontal and 8 vertical wells, completing the 3D seismic survey in progress, and leasing. The company holds 120,000 net acres that target Monterey shale across more than 30 onshore prospect areas, said Tim Marquez, chairman and chief executive officer.

“It has taken 5 years to complete the regional study, acquire land positions and commence drilling evaluation and development wells … We have made some big advances this year and while we’ve had some disappointments, we have seen nothing from our drilling this year that dampens our excitement about the Monterey opportunity,” Marquez said.

Venoco spent $23 million or 37% capital outlays in the quarter ended Sept. 30 on projects targeting the Monterey shale onshore. The company spud three wells, including its first horizontal well.

Through 9 months of 2010, the company has spud six vertical and two horizontal wells. Three of the six vertical wells were completed and are in various stages of testing, one was completed and is temporarily abandoned and will be evaluated as a water disposal well, one was used as a pilot hole for the first horizontal well that was completed in the third quarter, and one recently reached total depth and will be completed and tested.

One horizontal well was completed in the quarter and tested with a very high water cut that made it uneconomic. The second has been completed and the company expects to begin testing in early November.

Venoco spud its seventh vertical and its third horizontal wells in October and expects to spud another horizontal well in the fourth quarter.

The company plans to scale back Sacramento basin drilling in 2011 due to depressed natural gas prices and its onshore Monterey shale focus. It expects to end 2010 operating two rigs, down from four at present.

Venoco plans 40 wells, 220 recompletions, and 20 fracs in the Sac basin in 2011 and production to be flat to slightly lower compared with the expected 2010 average.

In the 9 months of 2010 Venoco completed two wells at West Montalvo field, performed a hydraulic frac of an offshore Monterey shale well and drilled an offshore Monterey shale well at Sockeye field, and conducted a handful of recompletions at South Ellwood field. It plans to spud a horizontal Monterey shale well at Sockeye before yearend.

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