Gulf Coast Western LLC (GCW), Dallas, has acquired a large working interest in a block of leases covering 29,000 acres in Conecuh and Covington counties in southern Alabama. Terms of the deal were not disclosed.
The company plans to participate in several wells on the acreage that will be drilled to test the Reef and Shoal intervals of the Smackover formation.
Also included in the acquisition was associated data from a 44-sq-mile 3D seismic survey completed on the acreage late last year. Drilling on the first of 21 prospects is expected to commence late in the first quarter.
“The current state of crude oil pricing created this opportunity and the terms of this deal were very attractive to us,” said Matthew H. Fleeger, GCW chief executive officer. “We were able to participate in this development acreage, which is in an area that directly offsets two of the largest Smackover oil fields in Alabama, at a cost that provides us with very attractive return potential as oil prices recover.
“This market is already proving that companies with the financial resources to capitalize on acquisition opportunities that were either unavailable or overpriced as recently as 6 to 12 months ago will be able to acquire some very valuable assets at below market valuations,” Fleeger said. “This acquisition represents one of those types of opportunities.”
Fleeger said analysis of the 3D seismic data concludes there are a significant number of drilling prospects.
“The data continues to be analyzed and drilling locations selected, but we are very excited by the number of reef and shoal drilling prospects in the Smackover, which ultimately we believe could be 40-50,” he explained.
“Additionally, we are pleased that if successful, these wells are not expected to produce large volumes of water during the production phase and are expected to flow without stimulation, which will further enhance the expected profitability.”
GCW is focused primarily in the Gulf Coast region with operations in six states. Notably, the company last year suffered a well blowout on its acreage in the Mallard Bay marshlands along the southern coast of Louisiana (OGJ Online, May 28, 2014). It was eventually brought under control.