Petrosearch Announces 2006 Progress and Status
Thursday June 15, 8:53 am ET
HOUSTON--(BUSINESS WIRE)--June 15, 2006--Petrosearch Energy Corporation (OTCBB:PTSG - News) today has provided an update on its 2006 activity to date. The Company has spent the first half of this year executing its business plan, which includes the development of its existing project inventory, the continued work to finalize its Barnett Shale project, as previously announced, and the participation in new exploration projects, while at the same time working to resolve certain discrepancies encountered from projects acquired in 2003-2004.
Richard Dole, Chairman and CEO, stated, "We are pleased with the progress we have made in 2006 so far. Not only has the Company started the development of the existing inventory of projects as discussed below, it has also been pursuing other potentially significant opportunities. These opportunities range from large resource plays in well known basins to production and asset acquisitions. We believe we have started to see the benefits from the building of the infrastructure we had worked so diligently to build in 2005 and we look forward to the future."
Wells Wells and
Drilled or Re-entries Potential
Project Name Formation Re-entered Planned for Wells Beyond
in 1st half 2nd half of 2006
of 2006 2006
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Upper & Lower
SW Garwood Wilcox - 0 3 4
including
Kallina re-entry
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Anadarko
Basin Morrow 1
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North Texas Lower Albany
Water flood Dolomite 8 4-8 29
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Gruman Lodgepole Reef 1 0 0
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Rodney
Island Tuscaloosa 1 0 0
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Tait-
Colorado Upper Wilcox 1 1 1
County, TX
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Burleson Austin Chalk &
County, TX Georgetown 0 4 11
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Mississippi
Tuscaloosa Lower Tuscaloosa 0 1 20
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Buena Vista Hosston 1 ? ?
SW Garwood Project, Colorado County, Texas - On June 9, 2006 the Company signed an agreement with all other working and overriding royalty interest owners in the Project to resolve certain discrepancies and issues that existed from the original agreement signed in 2004. All reversionary working interests will now occur at the time each individual well pays out instead of project payout. Of the 2,402 acres in the prospect, the Company now has: 20% heads-up working interest in approximately 240 acres; 16.00% working interest after payout on a well by well basis in 1,718 acres; and 21.5% working interest after payout on a well by well basis in 444 acres.
The initial well on this prospect, the Pintail #1, completed in the Upper Wilcox in December 2004, paid out in April of this year. As of payout, we began participating in the production from the well with 16% working interest. Production from the well has been consistent, averaging about 500 Mcfd equivalent.
A second Project well, Pintail Flats #1, was re-completed in June 2006. The well was re-perforated up-hole in sands within the Lower Wilcox. The Company believes the sands opened in the re-completion will produce at rates comparable to the very prolific sands now being exploited by Petrohawk Energy Corp. (NasdaqNM:HAWK - News) and Cabot Oil & Gas Corp. (NYSE:COG - News) less than one half mile west of the Company's westerly lease line. The initial reported test of Petrohawk's Garrett #1 is 11.235 MMcfd after stimulation. The sands currently open in the Pintail Flats #1, after being perforated but before fracture stimulation, produced rates as high as 1.4 MMcfd. The well is currently restricted to flow rates between 600 and 700 Mcfd while the fracture stimulation is being designed. The Company expects to stimulate the well within the next few weeks pending equipment availability. The Company anticipates post frac rates substantially in excess of the initial flow rate of 1.4 MMcfd.
A rig capable of drilling to 16,500 feet has moved on to a third location that was assigned proved undeveloped reserves in our 2005 year end evaluation. This well is also expected to exploit the same Lower Wilcox sands that are being tested in our Pintail Flats #1 well and those drilled and being drilled by Petrohawk and Cabot immediately to our west. The Company has a back-in working interest of 16% at payout of the well. The Company operates all existing wells and the total cost of all wells is being paid by one of the interest owners.
Anadarko Basin - During 2006, we participated with a 10% non-operated working interest in a single well in the basin drilled to a depth of 8,323 feet. This well was completed earlier this month at an initial rate of approximately 500 Mcfd. The Company believes its remaining 6 prospects in the basin continue to have merit and should be exploited during the primary term of their leases. On June 9, 2006 the Company entered into an agreement that increased its net revenue interest in 4,647 gross acres on these 5 prospects by 5.25%. The Company has also entered into an agreement with a third party to farm out these leases, plus an additional 480 gross acres in a sixth prospect, so as to accelerate the exploitation of all of the remaining leases. These prospects could support 8 or more wells if successful.
North Texas/Panhandle Water flood Project - As described in our recent 10-QSB, the first phase of the project began in March 2006 with the drilling of a new well, the Maddox #42, for production to a depth of 4,495 feet. An unexpected oil saturated fourteen foot limestone interval was found, and tested, approximately 180 feet below the top of the target water flood horizon (Lower Albany Dolomite). The reservoir appears to be normally pressured and does not appear to have been produced in the past. The well was completed April 13, 2006, and continues to produce approximately 8 bopd equivalent. As a result of this new zone discovery, the Company is evaluating plans to develop the zone without interfering with the planned water flood development. The leases include approximately 38 old wells, of which 20 have not been plugged. We have an ongoing program to enter each of the 20 wells that have not been plugged. So far, we have entered 7 of these older wells to determine their mechanical status and produce whatever oil or gas we can while working on the water flood design. At present, it appears that at least 2 of the 7 re-entered wells will produce at a commercial daily rate. Within the next 30 days the detailed study and development plan for the field should be finished.
Gruman Prospect, Stark County, North Dakota - In September 2005, we purchased an additional 21.25% working interest, giving us an 85% working interest in this Lodgepole Reef oil well. On March 28, 2006, we spudded a well (the Gruman 18-3) intended to be either an increased density well or a water injection well, updip of the Gruman 18-1. The well reached total depth of 9,890 feet on April 14, 2006, and has been completed as an injection well. We have established that the Gruman 18-3 is in pressure communication with the Gruman 18-1 and injectivity tests have been completed. Injection volumes and pressures will be supplemented with an electric submersible pump that will be installed later this month. Initial response at the Gruman 18-1 is expected within 60-90 days of the start of water injection with the oil production increasing from the current rate of approximately 80 bopd equivalent to a target rate of 200+ bopd equivalent.
Rodney Island, Tensas Parish, Louisiana - In October 2005, we took over operations of the Harper Z-1 well on the Rodney Island prospect from the previous operator after casing was set and cemented. As the current operator, and with the agreement of the other working interest owners, we initiated litigation in February 2006 against the previous operator for non-payment of their share of drilling and completion costs. Settlement discussions to resolve the dispute have begun.
Downhole mechanical difficulties hindered our attempt to complete the Harper Z-1 well so plans have been made to sidetrack the current well bore. We expect the work to begin by the end of July pending the timing of the outcome of the litigation.
Barnett Shale Project - The Company has been informed that a draft of the definitive agreement, in line with the terms of the Heads of Agreement as previously disclosed, should be available this week as should a draft of our restructured participation agreement. The venture has continued leasing and drilling activities as well as completing initial pipeline gathering facilities. We are encouraged by the progress made toward meeting the July 9 deadline to finalize the restructuring.
Tait Projects - Colorado County, Texas - The initial well to test the Upper Wilcox on this prospect reached total depth in May 2006. We determined all potential hydrocarbon bearing zones in the well bore to be non-commercial and the Company did not consent to a completion attempt by the operator in the shallower Frio sands. However, data from this well bore did provide support for the geological interpretation of the shallower Yegua sands between 2500 feet and 3100 feet in which we have 2 identified locations. The first of these is scheduled to be drilled at the end of this year or the beginning of 2007 pending equipment availability.
Burleson County, Texas, Projects -- A multi-well natural gas project that includes a total of 15 development and step-out locations in the Austin Chalk and Georgetown formations at approximately 10,000 feet vertical depth on a targeted leasehold position of approximately 11,000 acres, with 9,409 gross and 7,702 net acres having been leased. Horizontal wells are planned with total measured length of approximately 13,000 feet. The rig has been identified and the contract is being negotiated. The initial well is planned to be spudded as early as the first of August with a second well planned in the fourth quarter of 2006. We will have a 37.5% non-operated working interest in the project.
Mississippi Tuscaloosa Projects -- We have identified five Tuscaloosa oil prospects in the Mississippi Inland Salt Basin, in Yazoo County, comprising a maximum of 2,295 acres and up to 18 potential drilling locations. Eight locations are planned to be drilled in 2007, ranging from 6,150 feet to 7,500 feet in depth. Approximately 55% of the required acreage has been leased. Seismic data on the prospects has been reprocessed and confirmed our original geological analysis. We own 100% of the prospects and will operate the project.
Buena Vista, Jefferson County, Mississippi - The previous completion attempt in the lower sands of the Hosston zone has been abandoned and in May 2006 new perforations were made in a single 19 foot thick sand at approximately 15,312 feet. During initial unloading of the well bore after perforating, the well flared natural gas at non-commercial rates. Data is being evaluated to determine if fracture stimulation is warranted.
About Petrosearch
Petrosearch Energy Corporation, a Nevada corporation with executive offices in Houston, Texas, was created by a team of seasoned and successful oil and gas professionals for the purpose of finding and developing oil and gas reserves across the United States. Petrosearch is currently active in Texas, Oklahoma, North Dakota, Louisiana, and Mississippi. For more information please visit www.petrosearch.com.
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