Industry News - Mergers & Acquisitions - Quest completes strategic acquisition in 1,082 acres in the Cherokee BasinQuest completes strategic acquisition in 1,082 acres in the Cherokee Basin
by: OilOnline
Tuesday, October 03, 2006
Quest Oil Corporation has successfully acquired the Shinkle Lease, comprised of five oil and gas zones listed below. “We selected this acquisition because of our familiarity with the region, our ability to activate strategic partners and the overall economics we believe are achievable based on our internal capital allocation models,” stated Joe Wallen, Quest’s Operations Director.
Oil & Gas Zones Acquired
Squirrel Sandstone
Cattleman Sandstone
Bartlesville Sandstone
Mississippi Sandstone
Arbuckle
Granite Wash
As part of our strategy to be an active competitor in the junior oil and gas sector, we believe the best way for us to stay ahead of our competition in this active market is to contract directly with the sellers that often reside in close proximity to the lease and who are familiar with the history of the property. By doing so, we are able to expand our reach into local areas, increasing our infrastructure with an objective of reducing the time required to bring production online.
Our intent is to enter into agreements that we believe align Quest’s interests with the seller to create a “win-win” scenario. At the same time, by entering into strategic consulting contracts with the seller on the front end, we are able to keep the overall labor costs down by building the expense into the overall purchase price. In this respect, concurrent with the closing and recording of title of the Shinkle Lease, Quest engaged Mr. William Walker, the seller, and owner of B&L Oil, who will assist Quest with operations for the next 12 months.
Mr. Walker stated, “The primary zone is the Arbuckle formation at a depth of 1900’–1950’. Arbuckle wells average 50,000–100,000 barrels of oil per well on 20-acre spacing. There are potentially 40 Arbuckle wells that can be drilled. With proper drilling and completion practices, the Arbuckle in this portion of the anticline the reserve report prepared by W.J. Pearson, a Registered Geologist and Geological Engineer, indicates the well could provide for 2 to 3 million barrels of oil.”
Additionally, “Based on our knowledge of the surrounding properties, the `coal-bed' methane gas has good potential at a depth of 1250’–2000’, although it has not been tested on our lease. Based on the methane gas activity in Southeast Kansas, one 4’-thick coal seam can contain in place 1 BCFG per square mile or 640 acres. The estimate provided by W.J. Pearson, registered Geologist and Engineer, reported that under the Shinkle Lease is 6 or more coal seams, 6 BCFG per square mile. With the recommended spacing of 80 acres, 14+ gas wells can be drilled.”
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