Emerald Bay reported on recent crude oil-focused developments in South Texas.
Medina County In-fill drilling: Through its 25% ownership of Production Resources Inc. (PRI), and as the managing partner, Emerald Bay has more than 100 in-fill drilling locations on the existing leases in Medina County. PRI has recently completed its 1st ten-well drilling package on three separate leases in the Taylor Ina field. Considering the 175+ existing wells on PRI's leases, a comparative analysis shows each of the wells drilled have either met or exceeded the Company's expectations. Three of ten drilling permits have been received for the second 10-well program. It is expected that PRI will have seven remaining permits approved by the end of February in order to start drilling in early March. Approximately 50 to 60 wells are planned for development drilling on the existing PRI leases in 2011.
Medina County Well optimization: The well optimization plan is moving along nicely. Approximately 40 wellbores are scheduled for the installation of upgraded lifting equipment. The equipment has been secured and 5 to 6 wells are being upgraded each week. The other two phases of optimization will be (i) the work-over of the Olmos zone in the existing wells; and (ii) the perforation and production of the by-passed pay zone called the Escondido. Under Emerald Bay's direction, PRI has recently tested one well on the Escondido zone with great success. The Olmos zone was isolated; then the Escondido was perforated and put on pump with no stimulation needed. The initial 24-hour test produced 100% oil at rates equivalent to the Company's stimulated Olmos wells. According to plan, the up-hole potential of the existing wellbores has been converted to production very efficiently using Companies-owned equipment.
Land and production acquisitions: The Company continues its land and production acquisitions in South Texas with specific focus on Frio, Atascosa, and Medina Counties. Multiple deals are currently in various stages of due diligence and negotiations, and the Company is very optimistic that the transactions could close in the 1st quarter of 2011. Zones of interest will continue to be where the Company has specific experience; such as the Escondido, Olmos, Austin Chalk, Eagle Ford, and Buda. While the Eagle Ford shale is widely considered to be the crown jewel, the Buda has been equally productive for operators who have reached this zone just below the Eagle Ford.
"In March of 2010, when Emerald Bay took the lead and found the joint venture partners willing to get behind the Taylor-Ina project, the project was producing around 750 barrels per month. We firmly believed that Taylor-Ina had the potential to produce over 20,000 barrels per month with a focused optimization and drilling plan. Based on our current lease position and rig availability, we are projecting a 2011 year-end monthly production volume over 12,000 barrels. This provides a solid, repeatable production operation to build on as we expand in the Eagle Ford trend of South Texas," summarized Shelby Beattie, President and CEO.
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