PROJECTS
Lyons Point Prospect
The Company has signed a Participation Agreement to acquire a 17.25% working interest in the Lyons Point Prospect, operated by Clayton Williams Energy Inc (NASDAQ: CWEI) in Acadia Parish, Louisiana.
The prospect will be drilled to a total depth of 16,300 feet. The Lyons Point Prospect has a closure of circa 400 acres with a most likely resource potential is 3 MMBC (Million Barrels Condensate) and 60 BCFG (Billion Cubic Feet Gas) with upside potential of 4 MMBC and 80 BCFG. This estimate is conceptual in nature and insufficient activity has been conducted to determine a hydrocarbon reserve. The well is expected to take 45 days to drill and is planned to spud at the end of August 2011.
The Lyons Point Prospect is a seismically defined upthrown three-way structural closure that is bounded by faults on all four sides. The objective is the prolific Oligocene Marginulina Texana (MT) 1, 2, and 3 Sands, which are projected to be 700 feet thick.
The objective MT sands are productive in several fields in the immediate surrounding area. The main field fault is the same trapping fault that sets up Leleux Field, which has cumulative historical production of 5 MMBC and 300 BCFG from the MT interval.
Production rates are estimated to be significant given adjacent analog wells are producing at rates of 750 BBLCD (Barrels Condensate Per Day) and 15,000 MMCFD (Million Cubic Feet Gas Per Day). It is likely only four wells will be required to drain the structure.
The Company’s share of the initial dry hole well costs are estimated at US$1,317,000 (includes entry costs). In a success case the Company’s share of completion and facilities costs are estimated to be a further US$520,000.
The participation terms are favorable with the Company paying 23% to earn a 17.25% working interest. The net revenue interest is 75%.
This prospect is best classified as a “develo-cat” well (between a development well and a wildcat well) based on the proximity of producing wells and full support of the prospect by modern, high quality 3D seismic data. Clayton Williams have addressed the four principle geologic risk factors; generation and migration of hydrocarbons from source to reservoir, reservoir quality, reservoir seal, and structure in a very complete manner, again mostly with the support of the 3D seismic data.
This prospect was chosen over numerous others due to the work done and the risk mitigation.
The Board agree with the independent expert’s opinion that this prospect has a very high chance of success of somewhere in the region of 50-66%.
The Board also believes the operator to be of suitable competent experience to drill and manage this prospect in the best interest of all the partners.