Another strong Three Forks test. Abraxas Petroleum (AXAS, $1.93, Neutral) announced a recent Three Forks test (76% WI) in eastern McKenzie County produced 510 Boepd (77% oil) over the first 30 days. The well is currently producing 367 Boepd (89% oil) and should recover ~400 Mboe for a completed cost of ~$7.5 million in our view. (Abraxas indicated the well cost “was over $1 million below its originally projected AFE” and listed a drill and complete cost of $8.7 million on its latest presentation.)
The estimated ultimate recovery is comparable to previous nearby Bakken and Three Forks tests in our view, while costs were in line with our estimate. Abraxas is completing two wells and drilling a four-well pad nearby in the Bakken/Three Forks.
Cost improvements in the Eagle Ford. In McMullen County, Texas, an Eagle Ford well (25% WI) was recently completed with costs also $1 million below original AFE. Unlike the Bakken, we had not expected a cost improvement here, so this potential productivity gain should be viewed positively.
Abraxas anticipates providing a 30-day rate when available. The second Eagle Ford well has been drilled and awaits completion beginning December 10th while drilling operations should soon commence on a third Eagle Ford well.