Citadel’s Kern Bluff Field is a 1100-acre project with an estimated 60 million barrels of original oil in place (OOIP). Located adjacent to Bakersfield, CA. Kern Bluff was first discovered in 1944 by the Shell Western Exploration & Production Company. It had 169 vertical wells drilled up to the 1980s, recovering some 12 million barrels, or about 20% of OOIP to date. By contrast, similar fields in the area have achieved recovery of over 40% and up to 90% of OOIP, an indication of the unrealized potential the field may hold.
Citadel acquired its Kern Bluff acreage and facilities in July of 2015. The field features three separate oil formations, only one of which has been exploited by previous drilling. No new wells have been drilled in the field in more than two decades.
Citadel believes Kern Bluff is a prime candidate for the application of modern technologies and techniques. The field has not had Enhanced Oil Recovery (EOR) via steam since the 1980s, whereas most other surrounding fields have had near-constant steam. The existing wells were drilled on three to five-acre spacing, versus the one-acre spacing of analogous fields. And, no effective horizontal drilling has been conducted in a manner appropriate for the geology of the formation.
Citadel will develop Kern Bluff with a combination of new vertical and horizontal wells, recompletions of existing wells, and refurbishing facilities. As part of a recently closed debt financing agreement, Citadel has available operating capital to execute phase one CAPEX program of new wells, recompletions and facility upgrades.
Because of the current price-driven lull in production and exploration activity industry-wide, service providers are eager to devote their excess capacity to a project like Kern Bluff. This has created an attractively timed opportunity for Citadel and its investors.