North Dakota Operations
In 2008, Stetson (‘the Company’) accumulated a significant land base in excess of 20,000 gross acres on the Fort Berthold Indian Reservation in North Dakota. In October 2008 the Company reached an agreement to partner with Red Willow Great Plains, LLC (“Red Willow”). The terms of the agreement provide for Stetson to maintain a 50% operated working interest in the Allottee, or freehold leases, and a 40% non-operated working interest in the Tribal Lands. In addition, Red Willow agreed to pay for Stetson’s first USD$3.5 million of drilling costs incurred on the lands.
In September 2009, the Company completed the drilling of its first Bakken horizontal well in North Dakota. The well was placed on a flow back test in October. In November 2009, the Company installed downhole pressure recorders and shut the well in for approximately two weeks to record pressure build up in the Bakken formation. Upon removing the pressure recorders from the hole, oil and gas was noted at surface and the Company and its partners decided to equip the well with a pumpjack to produce the well. Gross production from the well in the first quarter 2010 averaged approximately 14 bopd (net 7 bopd). The Bakken zone has now been temporarily abandoned.
In order to further evaluate the lands and identify possible additional drilling locations, the Company and its partners have acquired approximately 220 miles of existing 2D seismic data. The interpretation of this seismic data was completed in July 2010 and the Company has updated its geological model based on the new information. As a result, the Company has plans to re-complete the existing well in a shallower horizon to assess potential for hydrocarbons. There are no current plans for further horizontal drilling in the Bakken formation.