SARGENT SOUTH FIELD- MATAGORDA COUNTY, TEXAS
The Company acquired 100% of the working interest in the 3,645 acre Sargent South Field from Calpine Natural Gas (NYSE) and its partner ("Calpine") in January 2004. The Sargent South Field is located onshore in Matagorda County, Texas, east of Matagorda Bay. In 2006 the Company acquired an additional 1,610 gross acres (1,288 net acres) from the State of Texas covering adjacent lands in the Gulf of Mexico. The total leasehold owned by the Company now totals approximately 4,204 net acres. Currently, there are three (3) producing wells on the Hamill Lease; Hamill #2, Hamill #14 and Hamill #17, with daily production in excess of approximately 1,900 MCF of gas per day, (MCFGPD), however, the Company can provide no assurance that the wells will continue to produce at this rate, if at all. There are also four (4) shut-in wells, Hamill #10, Hamill #11, Hamill #19, and Hamill #1-R.
At the time of the acquisition there were two producing wells, the Hamill #2 and Hamill #19. The Hamill #19 is currently shut-in and non-producing. During 2008, the Company may attempt to deepen the Hamill #19 outside of its existing casing.
A license to a 10 square mile 3-D seismic survey ("3-D") was also acquired from Calpine and this 3-D has been reprocessed, along with some recently purchased 2-D seismic lines. New drilling locations have been identified on this lease for drilling in 2008. The seismic and geological 3-D interpretation project process will be an ongoing process. When the results from any new wells are drilled on this lease, the data from the new wells will be integrated into and used to update our ongoing interpretation project.
The Company has an ongoing workover and recompletion project underway in the Sargent South Field that began in January 2005. The Hamill #2 well was cleaned out and recompleted in November 2007 and is currently producing at the rate of approximately 490 MCF per day on a 10/64 inch choke, with a flowing tubing pressure of 680 pounds per square inch ("psi").
During April 2008 an unsuccessful recompletion was attempted on the Hamill #10 well after the well ceased producing gas. This well is currently shut-in and being evaluated for possible recompletion.
The Hamill #11 well is currently shut in.
Hamill #14 was recompleted in April of 2008 in a new sand from perforations at 4,900 feet and is currently producing gas at the rate of approximately 300 MCF per day on a 9/64 inch choke with flowing tubing pressure of 800 psi.
The Hamill #17 was worked over in November of 2007 and currently produces gas from perforations in a stray sand at 5,630 feet at the rate of 1,150 MCF per day on a 10/64 inch choke with a flowing tubing pressure of 1,400 psi.
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During August 2006, re-entry operations commenced on the Hamill #1-R well, that was originally drilled by Gulf Oil Corporation ("Gulf") to a depth of 16,200 feet in 1961 and subsequently plugged and abandoned by Gulf in June 1967. Recent operations included milling out and removing numerous cement and bridge plugs set in the well when it was originally abandoned by Gulf. The well has been cleaned out to a depth of 11,000 feet inside the existing 9-5/8" casing. Cased hole logs were run in the well in October of 2006 and the well is being evaluated for possible gas sands for testing and possible production. The first recompletion attempted in November of 2006, at a depth of 5,560 feet produced gas, but in non-commercial quantities. The Hamill #1-R well is currently temporarily abandoned and being evaluated for deepening outside of casing during 2008 or 2009.
On or about March 16, 2007, our working interest partner in the Sargent South Field, Aquatic Cellulose International Corporation ("Aquatic") executed a Partial Assignment of Oil and Gas Lease and Bill of Sale whereby Aquatic conveyed to Century Resources, Inc., all of Aquatic's rights, title and interest in the Hamill and Hamill leasehold for all depths below a depth of 7,000 feet below the surface. In addition, Aquatics assigned all of its interests, regardless of depth, in Hamill and Hamill well numbers Nos. 14, 19 and 1-R. In return, we repaid Aquatics all deposits made toward the Hamill 1-R and Hamill #14 workovers and released Aquatic of all prior commitments made regarding these wells.
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