DXI Energy Inc. [DXI-TSX, DXIEF-OTCQB] on Monday March 12 released an operational update for its Woodrush Project in northeastern British Columbia.
“We are pleased to report that we are in receipt of licenses and permits required to mobilize a rig to spud the first of several exploration wells intended to demonstrate high potential targets delineated by the third quarter and fourth quarter integration and re-interpretation of multiple 3D surveys over much of the company’s 13,000-acre leasehold at Woodrush in northeastern B.C.,” said Robert Hodgkinson, DXI’s Chairman and CEO.
“The commencement of this drilling phase is a very exciting time for the company and we remain confident in our plan to significantly extend our existing oil pools south and east of the current producing wells and surface facilities while maximizing both netbacks and IRR,” he said.
“With $12 million of in-place gathering and production infrastructure, and a legacy production profile featuring conventional, light oil pool production, DXI is well positioned to be a highly attractive and most sustainable low cost producer in Fort St. John.”
Permit applications for the Woodrush drilling program were approved by the appropriate regulatory authorities on March 9, 2018.
DXI is an upstream oil and gas exploration and production company with a focus on Colorado’s Piceance Basin and the Peace River Arch region of Canada’s Western Sedimentary Basin.
The company has been operating its 99%-owned Woodrush property for roughly a decade, with production exceeding 675,000 barrels of oil. The project is located in an area that has historically been a hot spot for oil production in B.C.
The reservoirs that DXI is targeting have been dubbed “Halfway” due to the relatively equal percentages of oil and gas that tend to occur.
The company has previously said a new seismic interpretation using high resolution sensor geophysical data has identified numerous targets similar to amplitude and depth, but believed to be much larger in area and extent to the existing Woodrush oil pool. This new 3D interpretation encompasses approximately 6,000 to 14,000 acres owned and operated by DXI, the company said.
DXI’s aim is to expand production volumes, reserve life and value and develop sustainable cash flows to support its growth strategy at Woodrush.
DXI Energy recently struck a deal with a private U.S. investment firm, which has agreed to underwrite 50% of the initial $5 million oil exploration program at the Woodrush Project.
Under the terms of the agreement, the unnamed investment firm will pay approximately two-thirds of the total costs of the first well in the 2018 program, through tie-in, to earn a 15% gross overriding royalty.
All subsequent well and secondary recovery costs will be shared on a 50/50 basis with DXI for the same return. There will be no equity dilution nor interest expense to DXI.
On Monday, DXI shares rose 10% or $0.01 to $0.11. The 52-week range is $17 cents and $0.04.