Mallon Resources Corp., Denver, selling its Delaware basin properties to focus entirely on its East Blanco Unit in the San Juan basin, said its second quarter 2001 production from East Blanco will not be as large as expected.
Mallon's debt burden has kept it from pursuing all available projects at East Blanco, which contains "outstanding opportunities to increase reserves and production."
East Blanco second quarter production should be 17 MMcfd of gas equivalent, less than expected, because some new wells produced at lower rates than projected and due to a 5-day pipeline maintenance shutdown.
Unit wells have declined more steeply than expected given the calculated gas in place volumes, and a consulting engineers' study found that proper drainage might require infill drilling on the current 160-acre units. The unit's primary reservoirs have no good historic comparables on which to base decline curve projections, Mallon said (see map and cross-section, OGJ, Apr. 27, 1998, p. 77).
Mallon plans to drill five wells to test pressure depletion of existing pays on 80-acre spacing and evaluate potential at 4,200-5,600 ft in Cretaceous Lewis shale recently found productive west of the unit. Lewis is thought to be a source rock for much of the unit's shallower gas.
The company will seek an experienced partner to develop the unit's Cretaceous Fruitland coal, thought to contain 500 bcf in place, because development of an economic completion method will be required.
The unit is centered on 30n-3w, Rio Arriba County, 50 miles east of Aztec.