Victory Energy Corporation, through its partnership with Aurora Energy Partners, has acquired an interest in a new oil and gas prospect located in Lea County, New Mexico. The Company acquired its interest in the Pinetop prospect from a well-known operator located in Midland, Texas. The Pinetop prospect is 3D seismic-supported.
Based on rig availability, the initial well is planned to spud in the next 60-90 days. It will be a vertical well, and is expected require very little stimulation to complete and move into production. The primary objective of the prospect is the Cisco/Seaman carbonate trend at a depth of approximately 11,700 feet. If the initial well is successful, there exists the potential for eight additional wells on the acreage.
Based on seismic data, evidence from wells previously drilled in the area, and the Company's own internal analysis, Victory estimates that a successful well in this prospect has recoverable reserve potential of approximately 420,000 Barrels of Oil Equivalent (BOE) and a potential IP rate of about 330 BOE per day (approximately 86% oil, 14% natural gas) to the 100% working interest.
Victory acquired a 4% Before Payout (BPO) working interest, at a 2.94% net revenue interest, and a 3% After Payout (APO) working interest, at a 2.205% net revenue interest, in the Initial well to be drilled in the prospect, with subsequent wells drilled at the APO working interest. Total drilling and completion costs to the Company's interest are expected to be approximately $140,000 through the first well and $112,000 for each additional well. The Company paid a one-time acquisition fee of $53,307 for its proportional interest in the prospect.
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