West Texas Project looks very promising.
Crockett County, West Texas
Location: Crockett County, West Texas
Analog Production: 6 Wells Producing 300-500 Mcf per day
Land Holdings: 9,000 + gross acres under lease
Interest: Purchasing 100% working interest in 2 producers
Formation: Canyon Sandstone
Depth of Test: 4,400 – 5,500 Feet.
Depth of Target Interval: 4,600-4,800 ft.
Recoverable Reserves Estimate: 0.5 BCF per well location
Gross Pay Interval: Gas Intervals over 200 feet of sands
Number of Locations to Drill: 6
Projected Initial Production Rate: 300-500 MCF per day
Production Facilities: Pipeline in place
The Company has entered into an agreement with Oxalis Energy Group whereby the Company intends to purchase production from two existing gas wells from Oxalis. Under the terms of the Letter of Intent (L.O.I.), the Company is undertaking a due diligence on the project, located in West Texas, by a thorough review of the project data and well production history.
The Company intends to purchase a minimum of 1.0 MMCF per day from the two wells for a proposed purchase price of $1.5 million. In the event of a successful due diligence, to be carried out over the next 60 days, the companies may close the transaction by year end. In addition, as part of the ongoing development of the project, the Company will have the rights to drill a minimum of ten (10) development locations. The Texas gas play is low risk, development drilling where wells are producing on average of approximately 300-600 MCF per day. The estimated costs of drilling, completing and tie-in of each well on the lease is approximately $450,000. With production of 500 MCF per day, 10 wells could potentially produce 5MMCF and pay out in less than 1 year. The wells are long life and have reservoir engineering of 0.5 BCF per location.
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