Sequoia Interests is preparing to place these interests into a wholly owned subsidiary, known as Northamerican Energy Group Inc. These leases, located in the Pecos Valley Field southwest of Midland, Texas in the Permian Basin, pump oil from the Yates formation, part of one of the largest fields ever discovered in the United States.
Sequoia Interests' focus is to use these acquired wells for two purposes. First and foremost to test the Company's enhanced oil recovery product, SQI-21. Secondarily, to obtain oil and gas revenue streams to the company from production realized through its enhanced recovery efforts.
The leases being acquired currently consist of twenty-five established wells and one water disposal well. Sixteen of the twenty-five are currently operating, but it is the Company's intention to bring as many of the twenty-five wells back online as possible. Current average production on existing working wells from these fields is estimated at twenty barrels a day. Two of the wells, currently not operating, are located in the Queens formation, a deeper production zone. The Queens formation promises to be a potentially rich source of oil. According to monthly well production statistics from the Texas Railroad Commission's Web site, other operators in the immediate area have produced over $25,000 per month in revenue from recent wells established. It is the Company's intention to bring these wells online in the next several months, to capitalize on their strong revenue potential. The opportunity exists for Northamerican Energy Group Inc., Sequoia's wholly owned subsidiary, to also duplicate what other operators have achieved in the Queens formation and realize potential revenues in the $25,000 plus range per well before using its enhanced oil recovery product, SQI-21. Bringing these additional wells online could give Sequoia Interests the opportunity to add as much as $600k in addition to the existing revenue stream generated by the acquisition of the Pecos Valley Fields while at the same time continuing the Company's research and development on its enhanced oil recovery product, SQI-21.
Northamerican Energy will specialize in acquiring additional oil and gas leases with proven reserves that have the potential for increasing oil and natural gas production utilizing New Technology and Production Stimulation Systems, including Sequoia Interests' chemical formulation for enhanced recovery, SQI-21.
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