Helios Energy (ASX:HE8) has starting drilling a much awaited third well at its Presidio Oil Project in south-west Texas and is set to earn a 70 percent interest in the project upon the well’s completion.

It told investors yesterday that it had officially spud the Presidio 141#2 well, which is about 2,300 feet (700m) away from the Quinn Creek 141 discovery well.

The discovery well, Quinn Creek 141, flowed back 260 barrels of oil and 1,345 barrels of completion fluid within 168 hours following a single-stack frack of the lower Ojinaga Formation.

Should commercial quantities of oil be produced at Presidio 141#2, it should be fairly easy to sell by oil truck as the El Paso oil refinery is just 170 miles up the road.

READ: Helios Energy cashed up and ready to drill

Helios is planning to drill Presidio 141#2 down to 5,900 feet and then drill horizontally into the target Ojinaga formation for 1,400 feet.

The vertical section of the well will go through the entire San Carlos, Ojinaga, and Eagle Ford formations — the latter formation being responsible for the widely publicised ‘shale gale’ which blew through Texas from 2010.

A simplified geological cross section at Presidio

Once the vertical section of the well has been drilled, it will take cores and run logs — before it cuts into the Ojinaga for the horizontal portion of the well.

The horizontal section of the well will be steered against 2D and 3D seismic data that Helios has shot between the new well and Quinn Creek 141.

Once Helios has finished drilling horizontally, it will then undertake a multi-stage frack job on the well — although it did not say exactly how many stages this frack job would be.

It did, however, say the job would take place across the entire 1,400ft section.

It’s targeting the lower bench of the Ojinaga, as previous test work in the formation has indicated that porosity ranged between 4 and 12.5 percent and permeability measuring up to 0.75 micro darcys.

That means that at least at this early stage, it’s showing better oil-producing characteristics than the Karnes Trough, which was the source of so much oil production from the Eagle Ford shale.

More on Helios Energy

The Presidio Project is Helios’ main play in Texas as it aims to become the latest ASX listed company to succeed in the Lone Star state.

Proven oil finders, Peter Allchurch and Neville Henry, are co-founders of Helios. Peter Allchurch headed the technical team (which included Neville Henry) which directed Aurora Oil & Gas into the Eagle Ford Shale in Texas in late 2006. Aurora Oil & Gas was sold to Canada’s Baytex for $2.6 billion in enterprise value in 2014.

The technical work undertaken by Peter Allchurch and Neville Henry resulted in the identification of the Presidio Project and the Ojinaga Formation, with Helios drilling two successful ‘wildcat’ wells on the project last year.