HOUSTON, Texas, Nov. 30, 2017 (GLOBE NEWSWIRE) -- Contango Oil & Gas Company (NYSE MKT:MCF) announced today an update on corporate activity and operations on its Southern Delaware Basin acreage in Pecos County, Texas.
Contango experienced an unusually high volume of trading in its shares yesterday (11/29/17), which we believe is a result of two primary factors; (1) a significant shareholder liquidated their position due to it being the last investment in an old fund and (2) program trading as a result of Contango dropping out of the S&P SmallCap 600 Index due to market capitalization requirements. As a result of additional rebalancing of funds that mirror the S&P SmallCap 600 Index, there could be higher trading volumes in the short term.
2018 Budget Forecast
We are currently formulating our 2018 capital budget and anticipate maintaining a one-rig program throughout 2018. With much of the derisking of our 6,775 net acre (16,324 gross) position behind us, we are in discussions with our service providers to provide the necessary equipment to fully enact this program. Our acreage position allows for over 400 locations in 3 proven benches that are currently being developed in the area. This will provide significant inventory for the foreseeable future. Additional benches within the 2,600 feet hydrocarbon column seen in the Bone Springs and Wolfcamp may be delineated throughout the year by us or our offset operators providing the opportunity to be more aggressive in our well count and drilling program.
As previously announced, the borrowing base under our revolving credit facility was recently redetermined at $115 million pursuant to the regularly scheduled redetermination process for the facility. As of September 30, 20107, we had approximately $79.2 million outstanding under our facility and $1.9 million in outstanding letters of credit.
Southern Delaware Basin Activity
As previously announced, the Crusader #1H well (40%WI, 30.3%NRI) was drilled to a TMD of 20,275, including a 10,184 lateral in the lower Wolfcamp A formation and was temporarily suspended in August 2017 with completion initially scheduled for January 2018. Recently, a window with our frac provider opened and we immediately seized it, allowing completion operations with 50 stages of fracture stimulation to begin on November 14th. Fracing operations should be completed within the week and production will commence soon thereafter. This will be our fifth producing well in the area.
The Ragin Bull #3H (47.3%WI, 35.5% NRI) was spud on November 11th targeting the Lower Wolfcamp A formation. We are currently drilling within the lateral section and expect to reach total depth of approximately 20,200’ in mid-December. This well will include an approximate 10,000 foot lateral with 50 stages of fracture stimulation. A frac date has been confirmed for early January with production expected to commence in late January.
Upon completion of the drilling of the Ragin Bull #3Hwe will move the rig to the River Rattler #1H location in the most northern part of our acreage, approximately one mile north of the Ragin Bull location, and drill our first Wolfcamp B test. There have been multiple Wolfcamp B wells adjacent to our leasehold that have been put on line recently by our offset operators. The early results of these tests appear very encouraging for immediate development.
West Texas Production
The Gunner #2H which was completed in the Lower Wolfcamp A zone is still performing better than our expectations, having produced 78 MBOe in its first 3 months of production and the Rude Ram #1H which was completed in the Upper Wolfcamp A has produced 117 MBOe in its first 6 months of production. We are very happy with these results and will continue to seek the optimum recipe for completions as we get more aggressive in our well schedule going into 2018.
Contango Oil & Gas Company is a Houston, Texas based, independent energy company engaged in the acquisition, exploration, development, exploitation and production of crude oil and natural gas offshore in the shallow waters of the Gulf of Mexico and in the onshore Texas and Rocky Mountain regions of the United States. Additional information is available on the Company's website at http://contango.com.