LGO yesterday announced that Well GY674 has started production. Open hole flow rate was 500 bopd and choked backed to 240 bopd.
It is estimated that both GY672 and GY673 may require a down hole pump each.
While the amount of net oil pay is high from Pad 4, the lack of pressure could be the reason why a down hole pump may be required for each of the remaining two wells.
The need for a pump may result in investors drawing to a conclusion that production will be low due to the lack of pressure. Thus, there were a series of sells, made worse by the price oil which has fallen by more than US$10 per barrel in last few days.
Unknown to many, 96% of oil wells in the US use pumps from the very beginning. Read the article here:
http://www.rigzone.com/training/insight.asp?insight_id=315&c_id=4
As for me, any increase in bopd will continue to add to the revenue, and LGO remains a low cost producer. My disclosure: I am long LGO.
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