Hemi drilled a deep exploratory well on the Tebbens Lease which allowed us to discover several coal bed methane (CBM) gas and oil pay zones not previously explored in Woodson County, KS. An important new geological pay zone, the virgin Tucker Sandstone formation heretofore unknown to exist in Woodson County, had an exceptional show of crude oil. Hemi management strongly believes that when produced these gas-water solution drive wells may produce exceptional oil wells similar to the historical early 20th century original oil wells produced from the Squirrel sandstone geological formation. We will be producing this new oil pay zone once we have received the information from the drilling cutting samples and evaluated the information obtained from open hole logging. There was also an excellent oil show in the Squirrel pay zone in the deeper new well on the Tebbens lease. This deeper well will be needed as a water injection well in anticipation of ramping up multiple new well production so that we can produce oil from the new wells at the highest rate possible. We are drilling an offset well less than 100 ft. from this well so that we can produce the excellent oil show we had from the Squirrel Sandstone formation. Management believes, based on extensive experience in producing oil from reworked oil fields, that by using the new injection well to de-water the mature wells this will increase oil migration to the mature wells on the five contiguous leases in Woodson County.
Management and groups assisting Hemi are addressing issues involving the artificial low market cap. Management knows that the total value of the oil and gas reserves in Kansas, BOE values on leases in four other states, an extensive library of geological information, and management experience, confirms that the undervalued stock market price is irrational considering all the values and fundamentals above.
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