Jericho Oil (JCO.V) has released an extensive production and exploration update on its STACK JV operations in Oklahoma where two wells have been completed an no less than 4 (!) new wells are currently being drilled. Unless otherwise indicated, the percentages used in this article are the percentages attributable to the STACK JV. Jericho Oil currently has a 26.5% stake in the STACK JV, and you would need to multiply this percentage by the JV’s percentage to find Jericho’s indirect interest in the wells.
The STACK JV has a 23.5% interest (6.23% net to Jericho Oil) in the Valkyrie well which is targeting the Meramec formation. The well has now reached a depth of approximately 4,000 meters, and we should see some initial results later this month. The STACK JV also elected to participate in the Trebuchet well targeting the Osage formation, and that well is currently in the process of building the curve to initiate the lateral part of the well. The STACK JV owns a 48% working interest in the Trebuchet well, and a good production result would have a meaningful impact on the production profile of the STACK JV.
We are glad to see Jericho publishing a production update on the two completed wells where its STACK JV has a 47.5% working interest in the Wardroom and Swordspear wells. Wardroom is currently producing at a rate of 220 barrels of oil-equivalent per day (40% oil) and Swordspear is doing a bit better with 351 boe/day (of which roughly 50% is oil). As the Swordspear well was brought online roughly three months after the Wardroom well, the higher production rate at Swordspear shouldn’t exactly be a surprise. The net production rate attributable to Jericho Oil at both Wardroom and Swordspear combined is approximately 69 barrels of oil-equivalent per day. That’s not a lot, but keep in mind Jericho’s minority ownership in the STACK joint venture also means it had to contribute less cash to the joint venture. Owning a minority stake in the joint venture also means its position is accounted for as an equity investment, and the net cash balance held by the STACK JV is not included in Jericho’s own cash position.
And finally, Jericho Oil has caught the attention of some big players in the STACK. Jericho will obtain a fractional working interest in the Ula and Hilltop wells which will be drilled by respectively XTO Energy (a subsidiary of ExxonMobil) and Alta Mesa Resources. Both wells will target the Osage formation.