The Colorado-based Capillary will carry 100% of the costs on the re-entry of the Pathfinder-C11-12 well for a 5% interest in the Greenhorn Formation.
Capillary will re-enter the well, which was originally drilled under former chairman Richard Cottee to assess the deeper Niobrara Shale potential of the Colorado property, and will conduct the first tests of the Greenhorn Formation in the area.
Capillary will gain access of a modern, deep wellbore to cheaply assess its technology, while Freemont will gain additional insight into its lease for minimal cost and risk, handing over just a fraction of its net revenue interest in the well.
It will be the first trial of radial jet drilling in Colorado. Although the technology is still in testing phase it has been successful in varying oil and gas formations across North America over the past few years.
The technology, which was previously promised by AusTex Oil, was initially developed to enhance production in marginally economic existing wells, offering a less expensive means of drilling horizontal production wells than traditional techniques.
It uses high pressure water to "jet" laterals from a vertical wellbore, out to 500 feet.
Under the agreement, Capillary will drill eight, 500 foot horizontal legs into the Greenhorn Formation to test for the presence of oil.
Each horizontal leg will be equally spaced around the circumference of the well, accessing some 1200m of the Greenhorn formation, which averages 60-70m thick of thin limestones and dark-gray to black organic-rich shales about 1700m below the ground.
Over the 26.25 square mile Pathfinder project area the Greenhorn could contain 9.53 million barrels of oil per sq.mi based on petrophysical analysis, or more than 250MMbbl of potential.
Freemont, which drilled the C11-12 well in 2012, has been focused on the Pierre Marine Shale since the oil price collapse, and has shelved abandoned any plans to assess the deeper strata in a sub-$60/bbl oil price environment, but it says with Capillary taking the lead the new testing could open up a new source of production.
The recent Gustavson Associates evaluation did not include the Greenhorn Formation in the reserve and resource assessment, which was focused on the Pierre and Niobrara formations, which are likely to hold 34.9MMbbl and 220.7 billion cubic feet of gas (P90).
This week Freemont has also started drilling of the Bird-13-18 Pierre Shale well.
Bird-13-18 has been designed using a combination 3D seismic technology and highly advanced surface geochemistry to define what appears to be a new hydrocarbon accumulation, where the focus is oil without any gas cap.
The company is targeting to drill and complete the well for $US400,000 ($A505,000), which would be the lowest cost, deviated well that has been drilled in the Florence field.
