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Underground seeks cash to press California operations

Underground Energy Corp., Santa Barbara, Calif., has attained light and heavy oil production at two wells in the Santa Maria and San Joaquin basins in California while it sells a noncore asset and seeks other ways of raising capital to expand operations.

The company suspended testing at the Chamberlin 3-2 well at its Zaca field extension project in Santa Barbara County pending availability of cost-effective water disposal. Subthrust Miocene Monterey below 5,292 ft pumped 1,100 b/d of fluid, 4% oil of a lighter grade than the ultraheavy 8° gravity oil produced in the main part of the field (OGJ Online, May 23, 2012).

Mike Kobler, president and chief executive officer, said, “The process of completing and bringing the Chamberlin 3-2 well on to production has taken considerably longer than anticipated and has put financial strain on the company.

“We now have a better understanding of the characteristics of this new zone and how to test and produce the 3-2 well. We know the well has great pressure, permeability and natural fracture conductivity and we continue to believe that it has the potential to achieve optimized production rates in line with the average of over 200 b/d seen in wells drilled by other industry participants at the existing Zaca field.”

The Chamberlin 2-2 well went to 4,650 ft and penetrated 1,700 ft of oil-saturated, fractured Monterey shale compared with 1,100 ft of pay in Zaca field. The well made 30 b/d of oil with little water from perforations in the bottom one third of the net pay. The company has perforated the next third of potential pay and subject to raising funds may perforate further and stimulate the well.

Underground may also return to production and stimulate the Chamberlin 1-2 well, which was making 10 b/d before being suspended for the drilling of the 2-2 well from the same pad.

Meanwhile, the company, which owns 9,923 net acres at Zaca field, said its Gabriel 1-35 well in Burrel field in Fresno County has averaged 70 b/d of light oil from July 27 through late August. The well’s water cut is 99%. The company has 8,525 net acres and plans to redevelop Burrel.


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