Delta O&G updated its King City, California and Lonestar, California Prospects.
King City, California
On May 25, 2009, Delta entered into a Farm-out agreement with Sunset Exploration to participate in a drilling and exploration of approximately 10,000 acres of land located in Monterey County, California. Delta agreed to pay 66.67% of all costs expended in respect of the initial test well to earn a 40% Working Interest. On all subsequent wells, Delta agreed to pay 40% of the costs to earn its 40% Working Interest. It is expected that drilling operations will commence during the month of May 2011 as all permitting operations have been approved by Monterey County pending finalization of issues surrounding grading plans.
To date, all referenced lands were shot with a 2 dimensional seismic swath as well as a gravity survey. The prospect area is in and around the King City Oilfield, and the current data will enable the Company to effectively test the entire Monterey sections. Total depth for drilling will be approximately 4000 feet and it is expected that the Monterey formation will be encountered from 2000 feet to 4000 feet in depth. Updates will be provided as they become known.
On September 1, 2010, Delta entered into an agreement for the joint exploration and development of the Lonestar Prospect located in the North Sacramento Basin, California. The first well (the California 1-1) was drilled to 6,015 feet in mid September and encountered approximately 20 feet of natural gas pay from the Forbes formation with significant reserves. This has aligned with our extensive seismic reviews and demonstrates that our well has successfully penetrated a significant proven natural gas reservoir with no indication of water drive.
The well is producing up to 4.2 million cubic feet (4.2 mmcf) of natural gas per day. The well is capable of producing in excess of these levels; however, Delta and partners have been forced to restrict its flow rates for the time being due to PG&E line pressure issues.
Delta owns a 25% gross working interest in this well and at present, has fully paid the drilling and completion costs associated with this well. Delta and partners control approximately 900 acres of land in this area and expect to commence evaluating the balance of the land for additional drilling sites.
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