ReoStar Energy Corporation to Acquire Eagle Ford Shale Mineral Leasehold in South Texas
Reserve-Rich Play Has Potential to Build Upon Company's Success in Barnett Shale
May 27, 2009 10:43:00 AM
Email Story Discuss on ZenoBank
View Additional ProfilesFORT WORTH, TX -- (MARKET WIRE) -- 05/27/09 -- ReoStar Energy Corporation (OTCBB: REOS), an oil and gas company engaged in the acquisition, development and production of natural gas and oil properties with operations primarily focused on developmental resource plays and enhanced oil recovery projects, today announced that it has entered into a definitive contract to acquire 13,000 acres of Eagle Ford Shale leasehold in the Gulf Coast region of South Texas for $5.5 million.
The Company will receive a 75% net mineral interest in 13,000 acres of leases covering all depths for three-year terms. The transaction also grants ReoStar the right to acquire an additional 30,000 acres of surrounding mineral leasehold within an Area of Mutual Interest (AMI) known as the Hackberry Prospect and includes access to 44 miles of seismic data covering the same.
The Eagle Ford Shale, which is located in Gulf Coast region of South Texas near the State's border with Mexico, is an upper-cretaceous deposit that is approximately 100 million years old and ranges from 4,000 to 14,000 feet in depth, with thicknesses of 50 to 500 feet. Prospective target zones in the newly acquired block include the Wilcox, Edwards, Buda and Eagle Ford Shale.
The Company estimates potential reserves of 500 billion cubic feet equivalent (BCFE) in the initial 13,000-acre leasehold block, with individual well bore reserves ranging from 6 to 11 BCFE depending on the zone. Test wells will be drilled in both the Eagle Ford Shale and Edwards zones and estimated drilling and completion costs range from $5.5 million to $4.5 million per well, respectively.
A large, independent oil and gas company is actively drilling its very sizable leasehold block and recently completed its #1-H Butaud into the Eagle Ford Shale, which initially tested at 17.5 million cubic feet per day (MMCFD) and 2,500 bbls of condensate per day (BCD). Other operators in the area have reported initial production rates ranging from 5 to 9 MMCF and several hundred BCD per well, all of which are stated to be choked back to regulate production.
Mark Zouvas, CEO of ReoStar, stated, "We are very pleased to announce our entering into a definitive agreement to acquire the Eagle Ford shale assets, an area which has seen tremendous activity recently and is turning out to be one of the more rewarding unconventional gas plays in the US. This opportunity gives the Company low-cost access to this reserve-rich play and allows us to continue with the operational success we achieved in the Barnett Shale, where we have successfully drilled and completed over 70 deep (9,000') shale gas wells. An important part of this transaction is our affiliation with ZaZa Energy, LLC and our ability to leverage the talent and experience of its staff in developing this acreage. We will draw on ZaZa's vast knowledge of the area and bolster our own technical capabilities at the same time. This acquisition has the ability to launch the Company's reserves and profitability to significantly greater heights."
In connection with the transaction, the Company has acquired the services of ZaZa Energy, LLC under the terms of an executed Exploration and Development Agreement, which includes tenured oil and gas staff experienced in geology, engineering and land acquisition. The terms of the transaction include the issuance of 12 million shares of ReoStar's common stock.
About ReoStar Energy Corporation
ReoStar Energy Corporation (OTCBB: REOS), headquartered in Fort Worth, Texas, is an oil and gas company engaged in the acquisition, development and production of natural gas and oil properties with operations primarily focused on developmental resource plays and enhanced oil recovery projects. The Company has vertically integrated its assets to remove potential obstacles to growth, which will enable it to develop and produce assets without the risk, cost and time involved in traditional exploration.
The Company's strategy is to cost-effectively acquire an attractive portfolio of oil reserves that has a high ratio of possible, probable or proven undeveloped reserves. By converting these undeveloped reserves into proved producing reserves, the Company will continue to realize an increase in overall value at low risk and cost.
The Company's assets also include approximately 20,000 gross (16,250 net) acres of mineral leasehold located in Texas (Barnett & Corsicana) and Arkansas (Fayetteville). ReoStar's assemblage of E&P assets allows for appreciable, unimpeded growth into the foreseeable future.
Additional information is located on the company's website www.reostarenergy.com.
Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical complications, which may arise, could prevent the prompt implementation of any strategically significant plan(s) outlined above.
Contact:
Teresa Wright
ReoStar Energy Corporation
817-546-7718
or
RJ Falkner & Company, Inc.
Investor Relations Counsel
800-377-9893
Email Contact
