I do not think you get what is going on will take some grace and grease to get some well drilled and then we will be rich men.
Oil Investments – Santa Rosa Resources
The Kreyenhagen No.1 Joint Venture
Offering Summary
The company is currently developing leases in the San Joaquin Basin area of Central California. The company’s focus is on the Kreyenhagen Trend bordering Kings and Fresno Counties.
The company intends to develop both conventional and unconventional zones and will utilize slant drilling technology. This will allow for maximum penetration of the target zones and alleviate the need for steam injection or hydraulic fracturing.
The trapping mechanism is virtually the same as the massive Coalinga field (eighth largest in the state) located north of the prospect area. In addition, the adjacent Kettleman North Dome Field has produced millions of barrels from the same formations targeted in the Kreyenhagen Trend play.
The San Joaquin and Kern County areas are home to some of the largest oil and gas fields in the country. Approximately ten percent of all the oil and gas produced in the United States comes from this area.
Santa Rosa Resources, Inc. has acquired the rights to drill on approximately 1,141 acres on the Kreyenhagen.
The company will drill ten wells. Five deviated directional wells will be drilled into the Tremblor Sandstone Formation to a maximum depth of
1,500 feet.
Five wells will be drilled into the Kreyenhagen Sandstone (3,000 feet,) Avenal Sandstone (8,200 feet) and the Monterey Shale (9,500 feet) formations.
Potential Reserves And Cash Flow
Number of Wells: 5
Maximum Depth: 1,500 feet
Number of Formations: 1
Temblor Formation
Estimated Potential Reserves Per Well: 52,000 Barrels of Oil
Estimated Lift Cost Per Barrel: $10.00
Estimated Per Well Gross Reserves Value @ $85.00 Per Barrel: $3,237,000
The Temblor Formation Wells are infill developmental wells. The Joint Venture Manager believes that each well has a 70% chance of being commercially successful.
The deep wells are exploratory and the Joint Venture Manager estimates a 50% chance of each well being commercially successful. In the event that the first two deep wells encounter no productive zones, the Joint Venture Manager Intends to use the remaining drilling funds budgeted for the deep wells to drill additional wells in the Temblor Formation.
The Joint Venture Manager believes that the Joint Venture would be able to drill an additional eighteen wells. This would result in a total of 23 shallow wells. If 70% of the 23 wells drilled were commercially successful the Joint Venture would participate in 16 commercially productive shallow wells.
In such an event the wells would have a potential 3,328,000 barrels of recoverable reserves. At $85 per barrel the reserves would have a gross value (after lift costs) of $249,600,000. The total gross value per $175,000 Unit would be $776,880 or 4.4:1
Additional costs to the investor include, but are not limited to, Federal Taxes, California state income tax, local taxes, or ad valorem. Currently, the State of California does not have a severance tax for oil and gas. However, on an almost annual basis, a bill to create one is introduced into the state legislature.
The Preceding Potential Reserves and the attendant Potential Return are hypothetical and are for illustrative purposes only. The Joint Venture Manager cannot warrant that the Joint Venture will be successful or that the wells will produce commercial quantities of oil. If the wells do not produce you will lose your money.
Potential Reserves and Reserve Value
Deep Wells: Kreyenhagen, Avenal and Monterey Formations
Number of Wells: 5
Number of Formations: 3
Estimated Lift Costs: $10.00 Per Barrel
Kreyenhagen Sandstone Formation
Depth: 3,000 Feet Maximum
Potential Reserves Per well: 400,000 Barrels
Potential Total Reserve Value To Joint Venture Per Well: $24,900,000
Per Well Potential Initial Daily Production: 300 to 400 Barrels
Avenal Sandstone Formation
Depth: 8,200 Feet Maximum
Potential Reserves Per Well: 500,000 Barrels
Potential Total Reserve Value To Joint Venture Per Well: $31,125,000
Per Well Potential Initial Daily Production: 400 to 500 Barrels
Monterey Shale Formation
Depth: 9,500 Feet Maximum
Potential Reserves Per Well: 550,000 Barrels
Potential Total Reserve Value To Joint Venture Per Well: $34,237,500
Per Well Potential Initial Daily Production: 500 to 700 Barrels
The Preceding Potential Reserve estimate is for illustrative purposes only. The Joint Venture Manager cannot warrant that the Joint Venture will be successful or that the wells will produce commercial quantities of oil. If the wells do not produce you will lose your money.
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