The Runnells #7 is the second delineation well drilled in the Runnells Field and the third consecutive significant well drilled and completed in the Field. Once the Runnells #7 is turned to sales, Esenjay expects that total daily production from the three wells will be approximately 50 MMCF of natural gas and 1,500 barrels of condensate.
The Company anticipates that several additional delineation wells will be drilled in the Runnells Field. The next delineation well is scheduled to spud in the first quarter of 2002.
In November 2001, Esenjay sold a 23.45% working interest in the Runnells Field to Santos USA Corp. for $20.25 million in cash. Additionally, the Company was reimbursed for the Runnells #7 drilling costs attributable to the interests sold. Esenjay retains a 9.68% working interest in the existing Runnells production unit, which contains approximately 700 acres. Esenjay also retains a 10.57% working interest in an additional 1,400 acres covering this structure. The Company expects to record a gain on this sale of more than $12 million in the fourth quarter of 2001.
Esenjay has a total of five contiguous 3-D seismic surveys, most of which is proprietary, covering 170 square miles in Matagorda County, Texas. The Company currently controls approximately 17,000 acres in Matagorda County and has more than 20 3-D seismic confirmed prospects in the area, many of which have high potential in the same targeted deep geopressured Frio sands found in the Runnells discovery. Esenjay is the generator and operator of these prospects and has working interests ranging from 40% to 64%.
Esenjay's partners in the Runnells Field discovery are Santos USA Corp. with a 63% working interest, and Samedan Oil Corporation with a 24% working interest. The remaining interest is owned by private parties.
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