The cost of the acquisition is approximately $2,500,000. The newly acquired wells are producing from the Bartlesville Sandstone in the Nowata Field on 4,500 acres of land. Current net production is approximately 230 barrels of oil per day (bopd) and proved producing reserves are estimated at 700,000 barrels as of September 1, 2004, making the cost of acquisition $3.57 per proved producing barrel of oil and $10,870 per net daily barrel of oil. Cano expects to increase production on Nowata's existing wells through tertiary methods involving ASP chemical flooding.
"This acquisition marks another milestone for Cano as we aggressively pursue our strategy of acquiring mature oil fields with proven reserves," said Jeff Johnson, CEO of Cano Petroleum. "The Nowata Field offers immediate value in terms of its current production as well as significant upside potential. Our plan is to immediately begin analyzing tertiary methods to recover the bypassed oil that remains in the formation, thereby increasing production and the overall value of the property. In the interim, we will look for cost savings to maximize value for the company and its shareholders."
The acquisition is set to close on September 15, 2004.
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