LGO recently announced that Well GY675, the first well on Pad 5 has started production at 325 bopd and is now undergoing further test. The drilling of the final well, GY678, is in progress.
For the past one year, LGO has successfully drilled 14 wells bearing oil net pay of several hundred feet each. Many were producing several hundred bopd each but in the Q2 production announcement, we have seen the production dropping to 951 bopd.
I suspect that LGO is choking the flow to better increase the life span of the well so that it continue to flow naturally. Perhaps this has something to do with the depressed oil price that it is better to manage the resource as efficiently as possible.
I would also expect that LGO will eventually choke the flow from GY678 to allow it to flow at a more manageable rate while preserving the lifespan of the well.
My disclosure: I am long LGO. However, always do your own research as our risk appetite differs.
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