LINN continues to deliver strong results from the Granite Wash, where the company is focused on developing high-return, liquids-rich opportunities.
In the first quarter, the company had nine operated rigs drilling in the area and completed 14 operated wells. The company currently has 93 operated horizontal wells producing and 16 operated wells drilling, completing or awaiting completion. LINN also owns working interest in 32 non-operated horizontal producing wells with three additional non-operated wells in progress. The company's net horizontal Granite Wash production during the first quarter averaged approximately 137 MMcfe/d.
During the first quarter, LINN drilled its first three operated horizontal Hogshooter wells. These wells were completed in April and are in the early flow-back period. LINN's first well had an initial production rate of 2,454 Bbls/d of oil and 3 MMcf/d of liquids-rich natural gas. The second well had an initial rate of 2,891 Bbls/d of oil 4.4 MMcf/d of liquids-rich natural gas. The third well had an initial rate of 2,125 Bbls/d of oil and 3.4 MMcf/d of liquids-rich natural gas.
LINN's technical team has mapped the Hogshooter interval across the company's acreage in the vicinity of the first three wells. Based on this technical work, the company believes there are approximately 50 additional locations in this area, and LINN owns substantial additional acreage in both Texas and Oklahoma that will be evaluated for Hogshooter potential. LINN is also evaluating other shallow oil-bearing intervals in the Texas Panhandle such as the Lansing, Cleveland and Tonkawa. LINN believes its inventory of shallow oil opportunities will increase in this area.
Given the results LINN has experienced to date from the Hogshooter wells, the company plans to shift a portion of capital from the traditional Granite Wash drilling program to focus on the Hogshooter zone. LINN anticipates drilling 12 additional Hogshooter wells in the second half of this year.
In 2012, the company plans to allocate more than 50 percent of its capital spending to the Granite Wash to drill approximately 65 operated horizontal wells and anticipates the program will generate rates of return in excess of 50 percent. The company also plans to participate in 16 non-operated horizontal wells. In addition, construction is underway on a planned 43-mile extension of the company's gathering pipeline, compression and associated facilities, which will provide additional takeaway capacity for Granite Wash production.
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