Nostra Terra has signed an agreement with New Century Exploration to acquire a 1.0% APO working interest in the Vintage Hills prospect unit in Brazos County, Texas within the established Giddings field.
Development of the prospect will initially target the prolific Austin Chalk, which earlier drilling on the unit has shown to be divided into four separate horizontal reservoirs, with no vertical communication. The only vertical well drilled on the prospect, Agnello #1, produced modest amounts of oil and gas but, more importantly, proved all four of the Austin Chalk zones to be oil-bearing. The Agnello #2 well was drilled horizontally and produced over 190,000 barrels of oil and 1.2 billion cubic feet of gas from one of the zones, known as "Middle B".
A horizontal well (10,400-ft vertical depth with a 4,000-ft lateral section) will be drilled into the "Upper B" reservoir later this month, followed later by the "Lower B" and "A" zones. The "Upper B" is the thickest of the Austin Chalk zones.
Nostra Terra has paid a cash consideration of $38,267 in respect of its budgeted participation in the well and first lateral, with an estimated additional $5,854 completion cost.
Matt Lofgran, CEO of Nostra Terra, said, "The Vintage Hills prospect is in line with our strategy of securing interests in relatively low risk, high return and rapid payout assets in established producing areas of the US. Following the success of our first Austin Chalk well in 2010, where we reached 100% payback after just 35 days of production, we're pleased to acquire another similar interest in the same area."
He added, "Our objective is to grow and upgrade our portfolio significantly during 2011, and we are continuing to identify, evaluate and prioritize potential acquisitions. These include both larger and operated interests, but we also see value in participating selectively in smaller investments like Vintage Hills that offer substantial upside potential."
In addition to the four Austin Chalk reservoirs, the Agnello #1 well on the Vintage Hills unit also logged promising pay zones in the deeper Eagle Ford Shale (60 ft oil column), Buda (120 ft gas) and Georgetown (130 ft gas) formations, all of which will be held by production for potential future development.
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