DENVER--(BUSINESS WIRE)--BASIC EARTH SCIENCE SYSTEMS, INC. (OTCBB: BSIC - News) reports that the Roscoe 2H-8 well, a horizontal well located in the Banks Prospect in eastern McKenzie County, ND, came online in early May 2009. The well tested at a rate of 543 barrels of oil, 1,185 thousand cubic feet of gas and 122 barrels of water per day. Drilled in the Bakken formation, the well is currently flowing at a rate of 300 barrels of oil per day. Basic Earth’s partner, Panther Energy Company, LLC, Tulsa, OK, drilled the well and is the operator, with Basic Earth retaining a 6.5% interest in Panther’s interest in the well.
Commenting on the initial well production, President Ray Singleton said, “We are pleased with the successful completion of this well in the Bakken formation and are hopeful that an improvement in the price of oil will allow for addition drilling in this area.”
The Roscoe well, along with the Wil E. Coyote well previously drilled by Panther, is located on the 13,000 gross acres Banks Prospect which is overlying the Bakken formation. In August 2008, Basic Earth signed an agreement with Panther, the terms of which give Panther the rights to Basic Earth’s 20% interest in the Banks Prospect, a 20-partner consortium. Under the terms of the agreement, Panther was required to drill two horizontal wells in the Bakken formation and carry Basic Earth for its cost exposure in the first two wells. Basic Earth will now be required to pay its proportional share of costs for future wells drilled.
This is great news for BSIC- the highest producing well they have had in about twenty years- overall it will almost certainly add less net oil than the latest Halvorsen, which will likely come in with an ip around 300 bbls/day but BSIC has a 26% interest in the latest Halvorsen vs 6.5 in the Roscoe well. The great news about the Roscoe well is that it is the second in a row from Panther with over a 500 ip in ND- they can drill about 20 more wells in this area with a 6.5% interest, and the Roscoe is the second one they got for free- their cash flow is ramping up as the price of oil ramps up. The company is in their best shape ever and earnings will become very high starting this quarter. They have now drilled 21 consecutive wells without a dry hole!! -counting 16 in CO. , 4 in the Banks (including the 2 new ones from Panther) and the latest Halvorsen. How's that for great decision making? They have certainly earned a wildcat shot in their South flat Lake property, which a geologist told me that he thought had over a 50% chance- they have the opportunity to drill 4 there.
BSIC is one of the best stock values in America and will be in the top 1% of stock gainers this year. The thing that makes them so special is they are almost all oil (along with no debt and growing production)- they have a higher percentage of oil than almost any energy company at over 80% oil- oil prices will quickly pass $100/bbl, but natural gas is stuck due to a glut.
The share price should go over $1 tomorrow and have solid or very high volume.
Not huge numbers with only a 6.5% interest, but not bad either (wonder what the choke size is? I believe the well was stimulated too). The flow rates look alright and higher nat gas and oil prices are holding. Compared to the other microcap peers, this one looks cheaper which got me to nibbling here and there.