The McAlester Fuel Company, the operator of the project has informed the company that the drilling contractor will move on the property as soon as the drilling site pads are completed.
The first two locations will drill through the Massive zone, both Lobe #1 and Lobe #2, at approximately 6,800 feet and will penetrate several zones which the operator feels have a reasonable possibility to be productive. There are a total of eighteen zones which have oil or gas production history elsewhere in the oilfield. These zones will be evaluated in the first two well-bores.
A new discovery located 467 feet from our lease or approximately 934 feet (or 1/6th of a mile) from our first well-site has recently been placed on production. The well is estimated to have produced approximately 750,000 cubic feet of natural gas plus an undisclosed amount of condensate daily through recent time. The impact of this production so close to our development provides additional evidence of the presence of previously overlooked and not produced oil and gas bearing zones in our immediate vicinity and affirms the original prognosis for the project, namely small/negligible risk, but high potential for substantial reserves.
The property has some existing production and is well served with production infrastructure, a gas pipeline runs through the property. Productive wells can be placed on production within thirty days. Currently prevailing market prices for natural gas is between $5.00 and $6.00 per thousand cubic feet at the wellhead and oil prices range from US$33 to $37 per barrel.
The operator conservatively estimates that the property has potential to add over 2 million barrels of oil and 10 billion cubic feet of gas to existing reserves as a result of the proposed program.
The San Bernard No.1 well is awaiting tie-in and the North Strahan No.1 is awaiting completion. Portrush has a 5% interest in these two wells. All oilfield activity in the Gulf Coast has been severely impacted by consistent and heavy rainfall since late November. Recent weather improvements have allowed the Mission River project to get underway.
The initial twelve (12) well program in the Mission River will test (a) bypassed oil and gas payzones in the traditional producing intervals from 5,000 to 6,800 feet; (b) untested shallow oil at 4,100 feet and (c) untested shallow gas from 600 to 2,300 feet. Openhole and cased-hole logs, sidewall cores and open hole repeat formation testing will evaluate these intervals for completion. The project will add to the company's cash flow almost immediately, following drilling and completion operations.
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