Pryme Energy announced that it has purchased 2230 net acres in an oil rich region of the Mississippian Lime in Oklahoma. In conjunction with the acquisition Pryme will enter a 50/50 joint venture with Empire Energy with the objective of growing and developing its footprint within the Mississippian Lime.
Among the significant tight oil plays in the United States, one of the Mississippian Lime’s distinguishing traits is its lower-cost, shallower nature. Production per well in this play, which straddles the Oklahoma and Kansas border, may sometimes average less than other plays, but countering these lower production numbers are the advantages of lower well costs and increased access to infrastructure. The Mississippian Lime remains one of the nation’s more active plays after North Dakota’s Bakken, Texas’ Eagle Ford, and the Permian Basin. It’s one of several plays that have helped turn around US crude oil production.
The initial work program will comprise two vertical wells targeting known oil and gas producing horizons including the Wilcox formation, the Mississippian Lime and other shallower hydrocarbon bearing objectives. The proposed initial well locations are offset to current oil and gas production from both the Wilcox and the Mississippian Lime. The estimated cost of drilling and completing each well is approximately US$525,000 with a dryhole cost of approximately $180,000 per well to the 100% working interest. Costs will be shared 50/50 on a heads up basis with Empire and drilling is expected to commence within the 3Q of 2015.
The acreage was acquired from ASX-listed Raya Group. The consideration comprised 100 million fully paid Pryme shares and an estimated US$192,550 (A$250,000) cash. In addition, conditional consideration of an estimated US$135,000 (A$175,000) will be payable in respect of each of the first two wells in the event the gross 1P reserves from each well is certified, within six months after the commencement of production from the second well, to be equal to or greater than 31,000 bbl and 200 MMcf of natural gas.
Empire is the operator of the Newkirk JV and the holder of 4936 net acres within the joint venture’s area of mutual interest (AMI) which covers Kay and Noble Counties in Oklahoma. Subject to the performance of the first two wells, consideration will be given to increasing the acreage under lease within the AMI and balancing each party’s lease holdings such that each of Empire and Pryme has a 50% working interest in each lease within the joint venture area.
Image: Pryme oil development/Pryme Energy