BANGALORE - Oil and gas company Forest Oil Corp said production results from its third and fourth wells in the Texas Panhandle Granite Wash area exceeded its expectations, sending its shares up 14 percent to a year-high.
Forest Oil expects to run four rigs in the Texas panhandle in 2010, the company said.
Our Texas Panhandle Granite Wash program continues to exceed our expectations, not only from the extremely high gas rates, but also the strong liquid components associated with these wells, Chief Executive H. Craig Clark said in a statement.
Granite Wash success translates to strong volume growth, said Jefferies and Co analyst Biju Perincheril in a note.
The analyst said, earlier asset divestitures in the Permian basin had increased the company's liquidity to boost growth from core properties, but added he still has a hold rating on the stock due to his cautious view on gas prices.
Forest Oil said its third operated horizontal well in the area came in with a 24-hour production rate of 15.1 million cubic feet per day (mmcf/d), while the fourth well produced at an initial rate of 16 mmcf/d.
Both wells have an equivalent rate of 37 million cubic feet equivalent per day (mmcfed).
This compares to the second horizontal well, which the company completed in November and which came in with an initial rate of 10 mmcf/d for an equivalent rate of 30 mmcfed.
The Granite Wash is located in the Northern Texas panhandle and in Western Oklahoma, and is present in several different zones at depths from 11,000 to 12,500 feet deep.
The company said both the new wells had about 59 percent oil and natural gas liquids.
Shares of the company touched a year high of $28.72 in early trade before paring some of the gains and were up 7 percent at $27.00 in afternoon trade Thursday on the New York Stock Exchange.
Shares of larger peer Newfield Exploration Co, which operates seven wells in the Granite Wash, rose 7 percent to a year-high of $54.07 Thursday.
Shares of Penn Virginia Corp and Cimarex Energy Co, both of which have assets in the area, also rose 8 percent and 5 percent respectively. Cimarex shares touched a year-high of $58.14 on the New York Stock Exchange.
For the alerts, double click [ID:nWNAB4316] (Reporting by Arup Roychoudhury; Editing by Gopakumar Warrier)