Jericho Oil (JCO.V) has released a production update on its ongoing development program in the STACK acreage in Oklahoma. The company’s Swordspear well is currently producing at an average rate of 400 boe/day (61% oil), but the output is still climbing as the most recent reports are confirming a current production rate of approximately 500 barrels per day.
Although remarkable, this isn’t abnormal for oil wells in the Osage formation. Rather than immediately reaching peak production before initiating the gradual decline, oil wells in the Osage formation generally reach their peak production rates 2-3 months after the first oil has been recovered. With a current oil production rate of 500 barrels per day, it’s pretty clear the exploration and development theory of these Osage type wells appears to be working out pretty good. As a reminder, the STACK JV has a 47.5% working interest in the Swordspear well, and as Jericho Oil has a 26.5% stake in the STACK JV, the attributable production rate net to Jericho Oil is approximately 62 barrels per day. Which still is very meaningful considering the current strong oil price.
With the recent completion of two successful wells, it’s not a huge surprise to see the STACK JV electing to participate in the next Osage formation well (which will be called Trebuchet – we are curious if the well has been named after the French catapult). The spud date for this new well is in August, and we should see some initial flow results by the end of this year.
Another interesting thing is the fact Exxon Mobil has filed an application to drill two lateral wells targeting the same Osage formation the STACK JV has been drilling. Things appear to be heating up in Oklahoma, and Jericho Oil appears to be in the pole position through its stake in the STACK JV.