Lynden reported that Cawley, Gillespie & Associates estimates the Company's net Proved plus Probable (P2) Reserves at June 30, 2010 to be 8.25 million barrels of oil and 22.0 billion cubic feet of gas. Of this amount, Proved Reserves were 1.28 million barrels of oil and 3.70 billion cubic feet of gas. The net present value of future revenue, discounted at 10%, before income tax, of the Proved plus Probable Reserves as of June 30, 2010 is estimated by Cawley, Gillespie & Associates to be US $64.0 million.
All of the reserves reported are attributable to the Company's Wolfberry Project, located in the Permian Basin, Texas.
Lynden is seeking to expand its Wolfberry Project by upgrading the reserves through development drilling and by acquiring additional acreage. The Company expects three new Wolfberry Project wells to be spudded within the next ten days. Lynden is funding 50% of the cost of the three wells to earn a 43.75% working interest. Additional wells are expected to be spudded before the end of the year. The Company also expects to maintain an aggressive pace in developing its Wolfberry Project in 2011.
Wolfberry wells primarily target oil (and gas) production from the Spraberry and Wolfcamp formations, which are of Permian age and informally grouped to form the "Wolfberry" interval or zone. Secondary targets are also being evaluated for completion as part of Lynden's Wolfberry Project. Typical Wolfberry wells involve completions over a 2,500 to 3,000 foot gross interval, generally located between 7,000 and 11,000 feet, drilling depth. The Wolfberry Project covers approximately 18,000 gross (15,500 net) acres in Glasscock, Howard, Martin, Midland, and Sterling counties of West Texas.
Wolfberry targets continue to be actively developed by many senior oil and gas companies. This activity is resulting in the expansion of the Wolfberry 'fairway,' the validation of downspacing to 40 acres, and the testing of downspacing to 20 acres in certain areas. All of this is resulting in a dramatic increase in reserves attributable to the Wolfberry. In addition, new ideas, such as the exploitation of the Wolfcamp through horizontal wells, are also being tested by other operators in the area of the Company's existing Wolfberry wells.
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