Industry News - Mergers & Acquisitions - South Texas Oil Company to acquire additional acreage South Texas Oil Company to acquire additional acreage
by: OilOnline
Thursday, November 02, 2006
South Texas Oil Company has signed a Letter of Intent for the purchase of at least 50% and up to 75% working interest in approximately 20,000 acres in the DJ basin in Northeast Colorado.
South Texas Oil’s President, Murray Conradie stated, “We intend to purchase at least 50% and up to a 75% working interest (WI) and 60% royalty interest (RI) in the 20,000 acres being offered at a cost of approximately $15 million for a 75% WI. The purchase will be undertaken by issuing approximately 4,8 million shares of South Texas Oil restricted common stock.”
Significant points of interest for the field are as follows:
Drilling and recovery in the area commenced in the mid 1950’s and virtually all activity in the area ceased in the mid 1980’s.
A report prepared by an independent petroleum engineer based on a field of 3,800 acres within the 20,000 acres shows estimates of approximately 20 million barrels of oil, 9 billion standard cubic feet of solution gas and 8.3 billion standard cubic feet of free gas in the gas cap with only 30% of these known reserves recovered.
With today’s technology versus that of 20 to 50 years ago, i.e. frac techniques, drilling techniques, etc., the prospects for significant recovery of these reserves or new primary production and completion using these techniques is excellent.
A test well was recently drilled and completed with results of 500 mcf per day of gas production.
Three additional wells are scheduled to be drilled and completed in the next 90 days.
The entire 20,000 acre field offers the potential of over 500 wells.
South Texas Oil’s President, Murray Conradie continued, “We are very pleased to have the opportunity to acquire this acreage as the area offers multiple pay zones for both oil and gas, with some wells being capable of producing both oil and gas. The area additionally offers excellent secondary recovery opportunities using modern recovery techniques. Furthermore, a significant amount of the infrastructure which includes gathering pipelines already run throughout the area which translates to significant cost savings in the recovery of the reserves.”
Mergers & Acquisitions sponsored by:
|
