The farmin allows EnDevCo the right to participate in drilling three low risk wells to produce an estimated 16.2 Bcf of new gas reserves that have been mapped using recently acquired 3D seismic data. "All of the prospects are above 6,000 feet and exhibit high amplitude bright spots on the seismic data which is indicative of gas saturation at these depths in the Gulf of Mexico," stated Dick Boyce, Chief Operating Officer of EnDevCo. "In addition, most of the pay sands are already proven by previously drilled wells. These are low risk prospects which will establish cash flow and begin to build a reserves base on our balance sheet," added Chris A. Dittmar, EnDevCo's CEO.
EnDevCo will earn a 72% net revenue interest before project payout by funding 100% of all costs to drill and complete three (3) wells designed to produce the estimated 16.2 Bcf of gas reserves. After project payout, EnDevCo will retain a 50% working interest and a 37.5% net revenue interest. Estimated costs of the drilling program are $7.3 million dollars with work on the project to commence immediately upon funding by EnDevCo. All well locations can be reached from the platform and will utilize existing production facilities. Economic projections utilizing a gas price of $5.00/mcf held constant over the five year life of the project indicate that the discounted net present value (PV10) of these reserves are worth $19 million for EnDevCo's interest.
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