The operational team have excellent access to projects suitable for Imperial across continental North America. These assets are available for many reasons; they may be considered too small for the Oil Majors, poorly developed by the existing operator, or in need of partners in a capital starved environment who can also contribute high level expertise.
Imperial is able to bring to bear its considerable reservoir development and land acquisition expertise on these assets to transform them from under-performing to outstanding developments.
Existing operators benefit by partnering with Imperial expertise and finance or even whole divestment of non-core assets to Imperial.
Imperial currently has a producing project in Texas, a 14.9% working interest in the Cochran #1 well, operated by the El Paso Corporation, in Colorado County, Texas.
Imperial is already well advanced in securing the Chisholm Trail (potential “Company Maker”) and the Salt Water Disposal Project (“low risk, cash cow”) opportunities, subject to funding and a number of other substantial pipeline opportunities are available to Imperial and are under evaluation.
In line with Imperial Resources’ cost-effective model management is split across Imperial Resources and Imperial, enabling Imperial Resources to minimise its corporate overhead. Vital to Imperial Resources is the largely performance based reward system for its key oil and gas orientated operational management contained within Imperial.
Imperial Resources, Inc. Management
Robert R. Durbin – CEO, Imperial Resources and Imperial.
Mr. Durbin as an attorney who practices exclusively in oil and gas has acted in a General Counsel capacity to several oil and gas exploration and production companies and related service companies. He has used his technical undergraduate background to litigate hundreds of cases to successful conclusions. He has drafted and reviewed thousands of transactions for many energy companies, except from 2002 through 2003 when he was General Counsel and Vice President of Star of Texas Energy Services, Inc. Prior to that Mr. Durbin practiced primarily oil and gas law at his own firm (1987-2002), was Adjunct Professor, Southwestern Professional Institute (1998-2002) and regional manager at APL Services, Inc. (1979-1986).
Mike Mackey – CFO, Imperial Resources
Mr. Mike Mackey is assigned as CFO for the Company, including assisting the Company with operational and public reporting requirements, oversight and guidance of finance and accounting matters, and such other assistance as needed by the Company’s finance and accounting team.
Previously, Mr. Mackey was with Ascent Synergy Solutions as the Principal and Founder. His consulting firm focused on companies, typically in the technology, services or consulting markets, needing guidance and assistance at both a strategic and tactical level to realize their strategy and projections. Prior to Ascent Synergy Solutions, Mr. Mackey was the President, COO and Founder of Empyrean Benefit Solutions. He was responsible for recruiting a high caliber management team to assist in the formation of the company that included designing and implementing the operational, accounting and administrative infrastructure. Prior to Empyrean Benefit Solutions, Mr. Mackey was the CFO and EVP Finance & Administration for Synhrgy HR Technologies and FastWeb.com. Prior to FastWeb.com, Mr. Mackey was the CFO, EVP Finance & Administration for DA Consulting Group. He played a critical role in evaluation and selection of underwriters, drafting of prospectus, strenuous international road show and successful $34.5 million Initial Public Offering. Prior to DA Consulting Group, he was the CFO, EVP Finance & Administration for Global Software and was instrumental in a complex spin-off from a publicly traded company. Mr. Mackey has also worked for MicroAge Computer as CFO, Kirchman Corporation as a Lead Financial Analyst, PricewaterhouseCoopers as an Auditor and Lockheed Martin as a Lead Financial Analyst. Mr. Mackey received his BS in Accounting from the University of Florida, Gainesville, and his MS in Accounting & MBA from the University of Central Florida, Orlando.
Imperial Oil and Gas, Inc. Significant Contractors
Eugene G. Lawley, III – Land Manager
Mr. Lawley is an attorney by trade who is licensed in Texas and Mississippi. He has practiced exclusively in the oil and gas industry for the past 29 years. For the most recent 10 years his practice has been focused primarily on Title Examination and Land Management. Prior to that time he has practiced in those areas as well as Securities Transactions, Broker/Dealer registrations and compliance and was General Counsel for Trilogy Oil Corporation from 1984-1987. He has worked with major energy corporations, including Shell, Chevron, Exxon & Mitchell Energy, to develop land acquisition strategies and supervised as many as 20 Landmen toward achieving those goals.
Richard C. McPherson, RCM Inc. – Independent Evaluator
Mr. McPherson is a member of the Society of Petroleum Engineers and is a Registered Professional Engineer in Texas. He is President of RCM Engineering, Inc. and co-founder, Vice President, and Chief Operating Officer of McDay Energy Corporation. He is a graduate of Texas Tech University (1975) with a B.S. degree in Chemical Engineering. He has worked for El Paso Natural Gas Co., and in 1978 became the Area Drilling Engineer for Good Hope Refineries, Inc. in Laredo, Texas. His duties at Laredo included engineering support for ten drilling and workover rigs, well evaluations, plugging recommendations, compressor designs, and operations of 350+ wells. Since 1981, Mr. McPherson has been an independent petroleum consultant, and in 1985 formed RCM Engineering, Inc. He has also owned and operated a well servicing company operating in West Texas and as an independent consultant has extensive experience drilling, completing, and operating wells ranging from shallow (300’) pumping oil wells to deep (20000’+) high pressure gas wells. Mr. McPherson has also conducted reservoir evaluations for public and private oil and gas companies as well as for several lending institutions.
Imperial is already well advanced in securing the Chisholm Trail (potential “Company Maker”) and the Salt Water Disposal Project (“low risk, cash cow”) opportunities, subject to funding.
Additionally Imperial has access, via an extensive industry contact network throughout the onshore US, to numerous opportunities, including off market and pre market offers. These are scanned on an almost daily basis.
Imperial has in-house Oil and Gas legal services and contracted in land leasing and acquisition expertise to rapidly evaluate opportunities identified.
Projects which appear to fall within the company’s strict criteria are filtered through extensive due diligence. Once filtered all projects subjected to confirmatory independent third party validation and report prior to selection.
Chisholm Trail Prospect - Potential "Company Maker" Resource Play in Oklahoma
Imperial has agreements in place to take a 50% working interest participation in this major resource play in Oklahoma.
This is a fifteen (15) horizontal well development program including an acreage position of 5,000 acres. The wells are low risk with Proven Undeveloped Reserves, attracting a P90 or 1P rating. Imperial believes the reserves could be worth up to 3,450,000 barrels of oil and 30 bcf for this prospect alone, equating to 7,500,000 BOE (energy equivalent over fifteen wells).
Minor oil companies can be transformed by a single judicious choice of development: the stock market has happy history of success stories based on successful “Company Maker” developments, such as the Bakken Shale, the Eagleford Shale and the Marcellus Shale. The trick to these sorts of plays is to get into them early. In Imperial’s case the Chisholm Trail Prospect is relatively low risk, being predicated on recent proven technical advances to exploit a well known productive formation. The Chisholm Trail Prospect is an absolutely ideal fit for Imperial in its ambition to rapidly transform itself, at relatively low risk, into a significant oil and gas producer. The Chisholm Trail Prospect is therefore a potential “Company Maker” for Imperial.
A number of wells nearby with great success have been completed; all wells drilled are producing. Initial flow rates have exceeded 200 Bopd and 2,000 Mcf of gas per day. Furthermore, the produced oil is sweet with a high API specific gravity. The gas is also sweet, with a very high BTU content commanding a premium price. No H2S is present. Infrastructure is already in place with gas pipelines less than a mile from virtually all drill sites.Engineering risks are minimized: the formation is of relatively low pressure with shallow drill depths and reasonable length lateral well bores.
Imperial believes that a successful development of these fifteen relatively low risk wells could result in over $130,000,000 US of undiscounted cumulative gross cash flow to Imperial. Furthermore, the aerial extent of this formation could allow a larger field development of several thousand additional wells, offering a stratospheric upside for Imperial, well beyond even “Company Maker” success.
Salt Water Disposal Project
Imperial is currently re-negotiating a contract to acquire a majority participation interest in a supremely located Salt Water Disposal Well.
All wells in the Barnett Shale (the biggest gas producing structure in Texas) must be fractured (“Frac’ed”) to produce. After the frac treatment, the water used in the frac is pushed back up to the surface by the gas. The well produces this frac water for years after the well is frac’ed. The frac water picks up salt and other contaminants whilst in the ground. These, combined with the chemicals added prior to the frac, require that the water be disposed of in a safe and ecological manner, the most efficient way being by disposing back into the ground into a naturally salty water formation via a salt water disposal well.
The Salt Water Disposal Project facility provides this very solution in the heart of the Barnett Shale.
Previous owners spent $5.5m building the Salt Water Disposal Well facility and then attempted to operate using a shallow well. Due to the injection into a shallow formation, the operator of a nearby gas well alleged that the well affected his well’s performance and operations were halted by the Texas Railroad Commission. The Railroad Commission, recognizing that the approved facility had a vast amount of capital already expended, approved it to continue operations into a deeper formation, the Ellenberger along with a greater capacity.
The Ellenberger is the favoured formation for disposal purposes in this part of Texas as it is separated by thousands of feet of rock from any fresh water bearing formations. A subsequent lack of funds required to deepen the well to the Ellenberger has provided this opportunity to Imperial. The Imperial plan is to deepen the existing well to the approved depth and re-open the facility. It is also Imperial strategy to secure contracts with the water hauling companies to assure itself of success on a monthly basis and consistent cash flow. Once operations have been proven successful, Imperial will request that the Commission increase the daily rate permit, which is expected to be granted administratively.
The Salt Water Disposal Project is the very best located disposal well in the area being the closest disposal facility to the “historical core area” of the Barnett Shale i.e. the area of the Barnett with the largest concentration of wells. The Barnett Shall is the largest gas field in Texas. There are approximately 7,000 wells producing contaminated water within a 30 mile radius, which will continue to produce water for many years to come;
Barnett Shale gas wells flow back contaminated fracture water for years, producing a constant and known demand for disposal;
One of the most cost effective ways to increase production on a Barnett Shale gas well that has depleted is to re-frac, starting the entire production cycle over again as well as the entire water disposal cycle over as well;
Perpetual license to dispose of 15,000 barrels (current prices between $0.45 and $0.60 per barrel) of contaminated water per day with a strong possibility to increase to 30,000 per day after 6 months of operations;
Estimated to generate over $300,000 per month gross to Imperial after year 2 with early cashflow increasing up to that amount during the proceeding months;
New competition unlikely due to environmental barriers to obtain waste disposal licenses and current competition at full capacity despite being relatively remote from the main producing wells;
Effectively unlimited total volume disposal capacity, virtual perpetual asset;
Surface Facility already complete, including pumps, tanks, separation units, turning lanes into the facility. Everything is ready to go upon the well being deepened into the Ellenberger formation depth, a massive 2,000 thousand feet thick formation capable of sustaining constant input of huge amounts of disposal water without contamination risk to other oil and gas producing formations;
Experienced personnel still available and ready to go back to work;
Large acreage surrounding facility for value added services: truck parking close to the field, pipe yard, etc.;
Immediate Imperial valuation uplift on completion: highly desirable business in best location in field, $5.5m invested to date by previous owners;
Significant oil sales income from oil recovered from the disposal water in addition to disposal fees.
Imperial has entered into an Oil and Gas lease Agreement with the mineral owner of approximately 35 acres and the Nunnelly #1 wellbore in Montague County Texas.
The Agreement provides for the development of the lease area and the existing well, known as Nunnelly #1. The well offers Imperial a very low entry cost opportunity into a relatively low risk well that could, if successful, produce early revenues for the Company with no critical exposure.
Deepening of the existing Nunnelly #1 wellbore is the Company’s first planned option. However, the Company may decide, as works progress, that the most cost effective course would be to drill a new well to access the Project’s potential reserves.
Imperial has the option, at its sole discretion, to pay the costs associated with the deepening and completion of the well, or alternatively, again at the Imperial’s discretion, the drilling and completion of a new well.
Analogous wells in the near vicinity have produced cumulative totals generally in excess of 17,000 barrels of oil without the benefit of modern stimulation technology. Imperial believes that the potential cashflow from the Nunnelly #1, if commercially successful, will provide useful revenues as the Company progresses its planned transformational Oklahoma Resource Play and Salt Water Disposal Well opportunities.
Stateline Infill Project
Imperial has conditionally entered into a Farmout Agreement for the right to earn acreage in the Stateline Infill Development Project in the existing Sawyer Field, in Lea County, New Mexico.
The acreage is sufficient to accommodate 4 vertical infill wells under current acreage spacing requirements in the Sawyer Field, targeting the San Andres Formation.
The Sawyer Field was discovered in 1947 with the establishment of oil and natural gas production from the dolomites of the San Andres Formation. Well spacing is currently 40 acres, allowing selective infill drilling on a smaller spacing basis. Similar fields in New Mexico and Texas are currently being infill drilled on 20 and 10 acre spacing, which would present additional upside to Stateline. Planned infill wells are relatively shallow at < 5,000 feet and are expected to produce oil and gas. With substantial well control in the area and following a review of analogous vertical wells nearby, the Company now anticipates that reserves for the Stateline wells, if successful, to comfortably exceed 30,000 BOE per well. Existing oil and gas gathering infrastructure is nearby.
The Farmout Agreement allows the Company up to nine (9) months from January, 2011 to drill the initial test well which will earn 40 acres and then the opportunity to drill 3 additional wells to earn the balance of the acreage envisioned in the Farmout Agreement, subject to a reservation by the assigning party of a 10% working interest in each well drilled.
Stateline is in line with the Company’s objective to exploit niche, low risk oil and gas opportunities in the onshore U.S. with the potential to deliver cash flows normally associated with higher risk projects, but without exposure to high risk failure rates.
Imperial believes that Stateline offers the Company a low entry cost complementary opportunity (subject to the commercial success of the infill wells) to build significant production and reserves as the Company progresses its planned transformational Oklahoma Resource Play and Salt Water Disposal Well opportunities.
Imperial Resources Inc.
106 East 6th Street, Suite 900