US oil and gas explorer Armada Oil has completed the $6.5m acquisition of a 100% working interest in six producing oil and gas leases covering around 1,040 acres in the Vernon field in Woodson county, Kansas.
Armada believes that the existing shallow well field provides stable, low-decline, long-life production with low operating costs as well as the potential for the drilling of over 150 additional wells.
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Some of the existing 125 shallow wells are shut-in pending maintenance or recompletion work, while others are used as pressure maintenance water injection wells. The production is currently around 80 barrels a day.
The company is in the process of evaluating the assets and expects to formulate and implement a development plan for the improvement of the existing wells as well as for drilling of additional wells over the next few months.
Armada Oil CEO Randy Griffin said that the acquisition represents a step forward in the asset reallocation strategy of the company.
"We are pleased to be taking this step and, subject to the availability of additional capital, look forward to the drilling in 2014 of multiple wells in Kansas as well as the initial test well in our Niobrara operating area in Wyoming," Griffin added.
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By GlobalDataThe company is currently holding discussions with various potential capital sources and will announce new financing initiatives soon.
