Texas Properties

The Swenson 2A well has been shut in for several years due to excessive holes in the production casing.  It was originally planned to be plugged, however with the implementation of a jet pump management may attempt to run a slim hole set up on it and produce it using the same jet pump as is placed on the Swenson 1A well which is 120 feet away.  The well has made over 33,000 barrels oil from the Upper Swastika Sand and was making 3 to 6 bopd when it was shut in.

We have chosen to drill the Swenson A-3 well approximately 330 feet from the north lease line and 1,650 feet from the west lease line or about 660 feet directly north of the old Swenson #5 well and about 660 feet directly west of the Swenson #15 well.  This location should result in an excellent producer and allow us to test the Tannehill Sand in the 1850 foot range to determine if it is carrying hydrocarbons.

This location for the Swenson A-3 development well is supported by the geological mapping of several oil formations on the property which currently, or have in the past, produced large volumes of oil.  The proposed drill site is spotted on the six (6) accompanying maps in the NW/4 of the Swenson property (the Swenson Lease is outlined in Yellow).  A review of those maps indicates that the proposed location should encounter an area in the Lower and Upper Swastika Sand and Gunsight Limestone which are all productive.

During the production of the Lower Swastika Sand in the 1950’s, a pressure maintenance program was implemented to extract more oil.  It was very successful as the wells produced for several years before any pumpjacks were used in the production.  However, once water was introduced, it quickly broke through from the injection wells to the producers and it is believed a substantial amount of oil remains between the wells.  This was confirmed when the Swenson A-1 well was drilled and indicated a 10-foot oil column in the top of the Lower Swastika Sand.

Water was reportedly injected into the #3, #8 and #12 wells.  The oil well records in Landmaster’s offices also indicate that water may have been injected for a short time in the #13 well before it was plugged in 1958.  Landmaster found the bottom hole pressure in the Lower and Upper Swastika Sands as well as the Gunsight Lime formations is still near their original virgin pressures or a bit higher due to the injected water.  This means that production rates should be very good.

At this location we expect to find the Lower Swastika Sand about 25 feet thick and based on several structure maps, only 1 included herein, and production rates on the Kieke, an oil cut between 20 and 40%.  The average production for the Lower Swastika Sand on the Swenson lease was 159,281 barrels of oil per well.  However, we believe this number includes about 20,000 barrels of oil from the Gunsight Lime as the pays were comingled later.

At the proposed location for the Swenson A-3 well, the Upper Swastika Sand should be about 40 to 45 feet thick and structure-wise, about the same as the Swenson #7 well.  It will be about 35+ feet higher than our Kieke Hess #5 well which came in producing about 18 bopd and 280 bwpd.  The Swenson A-2 well produced over 33,000 barrels oil from the lower section of the Upper Swastika Sand before the well was shut in.  In the few other wells in the field that produced the Upper Swastika Sand, they averaged better than 40,000 barrels of oil each.

And the Gunsight Limestone at the proposed location should be about as thick and high as the Swenson #4 well which produced 23,538 barrels of oil from the Gunsight formation before it was comingled with other production on the lease.  From what we can ascertain from the well files in the office, the average Gunsight well produced between 15,000 and 23,000 barrels of oil each on the Swenson Lease.

Thus, for the 3 oil pays identified, we could be looking at producing over 100,000 barrels of oil from the new well.  While that may be high, even half of that number translates into a great well.

Also, a bonus could be the Tannehill Sand at about 1850.  This pay tested oil in the Swenson A-1 well a few years ago, but did not produce as we believed it to be tight at that location.  The Tannehill Sand produces about 6 miles SW in a small field and about 15 miles ESE.  And generally speaking, when a Tannehill Sand is found, it produces between 500,000 and several million barrels oil.  There is a small field inside the city limits of Abilene which has produced nearly a million barrels of oil from about 6 wells.  The pay generally has little to no gas drive and does not start to really produce until water is injected.  If the Tannehill is productive on the property, it is up to 55 feet thick to the east of this well.

We will also have a possible pay with the Flippen Limestone and Sandstone at about 2200 feet.  The pay had shows in the Swenson #19 well’s sample logs.

For the above reasons, we are recommending drill the Swenson A-3 well at the appointed location.

During December and January 2019, Landmaster tested the use of a jet pump instead of a conventional pumpjack to produce its Swenson #6 well after having run a liner inside of it as described under the Swenson 1A well.  Prior to the installation of the jet pump, the pump jack was producing about 400 barrels water per day and 3 to 5 barrels oil per day.  The jet pump increased the electric bill by 5 times to around $2,000 per month from about $400 per month, but oil production rose to a steady 12 to 13 barrels oil per day.  The volume of fluid moved was increased to over 1,500 barrels per day.  At the same time, the electric bill on the saltwater injection well decreased even though the well was moving more water than before because the injection pressure had dropped.  This confirmed our suspicions that the 2 wells were in communication with one another.  However, even with the communication problem, the oil increase of 7 bopd more than made up for the increase in the electric bill.

The Swenson #6 and #9 wells are direct offsets to the Swenson #8 well which is the saltwater injection well and it is believe both #6 and #9 are in communication with the injection well.  The remedy for this is to inject a polymer solution which diverts the water to other areas of the reservoir where oil is located and will again begin to move toward the producing wells.

The Swenson #9 well is a direct offset to the Swenson #8 saltwater injection well and is thought to be in communication with it.  The well currently has a 4 ½” liner inside the 7” production casing set, but it has a hole in it also and is stuck.  This well will be one of the last wells we rework due to costs.

The Swenson #8 and #12 wells are designated by the Texas Railroad Commission (RRC) as saltwater injection wells.  The #8 well has 4 ½-inch casing cemented in it and was taking all the water we produce (sometimes over 2,000 barrels water per day) at about 600 psi before the installation of the jet pump.  After that, injection pressure dropped to around 400 psi. We are injecting the water into the Upper and Lower Swastika Sands.  The main problem here is moving the water through a ½-mile 2 3/8-inch tubing pipe.  Ideally, we should move the water injection pump to the wellhead which would lower our risks of a saltwater spill.  Costs to move the pump and set up a couple of water storage tanks would be approximately $30,000.  Or we could lay a new Salta Tubing line and purchase an additional water storage tank for a bit less.  A decision will be made later.

The #12 well was completed into the Upper Swastika and it tried to flow on the 4^th swab after fracking.  The well was producing up to 30 barrels oil per day but also about 700 barrels of water per day with a progressive cavity pump (screw type pump).  The tubing anchor came unseated and dropped 20 feet.  We screwed back into it, but the little rig could not unseat it and its tongs were not strong enough to turn it.  It needs to be returned to production as a saltwater injection well at this time to accommodate the additional water we will be producing.  We have another saltwater injection pump on the property to set on it and power is already at the location.  The pump will handle 2,500 barrels of water per day – the same as the one on the #8 well.  We will need to set a couple of water storage tanks and another satellite telephone alert system.

Operating expenses on the Swenson wells have been extraordinarily high due to holes in the old well casings.  The #9, #14 and #15 wells originally had 7-inch production casing.  In the late 1980’s 4 ½ inch liners were run into these wells with a packer on the bottom.  When the #14 well was recompleted into the Upper Swastika, the 4 ½-inch casing began to come up out of the well during an acid job and had to be pulled.  Since we were running 2 7/8-inch tubing for production, it was thought the 4 ½ inch casing would be too small and could pose a danger of losing the well should anything fall into the well or a hole develop and drill cuttings or scale fall around the tubing.  Therefore, in that well’s case, no liner was put back in the well and instead a larger packer has been used to produce the well.  The result has been that the saltwater on the backside of the tubing has caused it to prematurely fail and when it does, it allows some of the water to seep into the tubing and then it works on the sucker rods causing them to prematurely fail also.

In February 2020 South Plains Petroleum, Inc. implemented the reequipping of this well by installing a 4 ½” casing liner and 25 hp submersible pump.  The well had been producing between 10 and 15 bopd with top production around 18 to 20 bopd.  With the new pumping system, the well began producing 40-42 bopd and after 3 weeks was still producing a steady 40 – 42 bopd.  Actual operational costs at that rate of production are below $6 per barrel.

The #15 well needs to be recompleted into the Upper Swastika.  This well had all but a few joints of the 4 ½ inch casing removed from it years ago.  Reportedly, there are still 2 or 3 joints of 4 ½ inch casing and the packer sitting inside the 7-inch casing.  Again, we would need the reverse circulating unit and power swivel to clean the well out and wash over the 4 ½ inch pipe to pull it out.  Once it is out, we would complete the well and then run the 5 ½ inch casing inside of it to prevent premature tubing and rod failures.  The electric log looks much better on this well than some of the others and it is anticipated that it should be a very good oil producer.  And too, the Lower Swastika has much more separation from the Upper Swastika in this well than most of the others which should allow for much less water production.