Underground Energy Corporation confirmed significantly improved operational performance from its Gabriel 1-35 well at Burrel, in the San Joaquin Valley following optimization work carried out by the company. Online efficiency at this well has increased from 59% in second quarter to 85% in August. Average August production from Gabriel 1-35 was 52 barrels of 30 API oil per day; resulting from August production of 62 barrels of oil per stream day, with an online efficiency of 85%.

This is a significant improvement from the 20 barrels of oil per day, the well was producing when UGE acquired the asset and with light oil in California receiving a significant premium to the West Texas Intermediate oil price; this well is providing an enhanced source of cash-flow for the company. The company has 7,311 net acres at Burrel, of which, 2,300 net acres is core to the Gabriel 1-35 well geology. Given the solid operational performance it is now achieving from its Gabriel 1-35 well, the company has re-evaluated its geologic mapping at Burrel and, in addition to the previously identified proved undeveloped drilling location, management has identified additional future well locations.

Management is preparing a permit application for the next well. The Gabriel 1-35 well has a high water cut of close to 99%. However, it has a water disposal well on-site and by optimizing this disposal well, and implementing a number of other measures to improve operational efficiency, the company has increased the capacity of the water disposal well by approximately 70%, a key factor in the improvement in online efficiency to 85% and the resulting improvement in production.

The company will look to optimize this well further with the goal of achieving online efficiency of over 90%. It is also implementing additional measures to reduce operating costs and increase the already strong netbacks it receives from this well.