Earlier this year, GulfWest refinanced its largest debt and secured development capital for a workover and development program in its core fields. As a part of this refinancing and development strategy, the company planned to focus its efforts and capital on oil and gas assets in three general areas: The eastern half of Texas, southwestern Louisiana and the D-J Basin of Colorado. GulfWest decided to exit the mature, high well count, low production rate wells it owned in West Texas and Oklahoma. The closing on Oct. 1, 2004 completed this exit plan.
The sale of the three fields netted the company a total of $1.6 million cash, $500,000 of which was used to reduce debt and the balance is being directed toward the funding of its 2004 workover and development program. The company reduced its well count 62% from 680 wells in June 2004 to 260 wells post closing. Wells in the three fields accounted for almost 20% of the company's lease operating expenses but only 6% of the company's net production. The sale of these three fields concludes the initial stage of property dispositions the company had targeted to achieve this year.
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