MAXIM TEP Hits Oil Again and is Nearing Comletion on 8th Well in California
The Woodlands-based MAXIM TEP confirms earlier reports that significant quantities of sweet crude oil and gas were encountered in the Company's 7th well, and that an 8th well is now nearing completion on its Sledge Hamar prospect, in the oil-rich South Belridge section of California. Through agreements with Orchard Petroleum Limited (Australia: Orchard) and Orchard Petroleum Inc. (OP Inc.), a wholly owned subsidiary of Orchard, MAXIM holds: a 75% working interest; funds 100% of the drilling budget; and has pledged the first $28 million of the development capital needed for the multi-well drilling program on their nearly 1,000 acre parcel within South Belridge which is one of the nation's most prolific oil fields. The Company's parcel sits adjacent to that of Aera Energy LLC who have publicly reported 140,000 barrels of daily production. This parcel could accommodate up to 1,000 wells, with 12 wells planned to be finished and producing by year's end and 10 more to begin in the First Quarter 2006.
MAXIM, a Texas corporation headquartered in the Houston, Texas suburb of The Woodlands, first acquired its interest in Sledge Hamar with Orchard in February 2005. Two wells had already been drilled on the parcel (#14-7 and #135-7); and, when testing proved positive, drilling began this April on Wells #3-7 and #47-12. Wells #7-12 and #16-7 were drilled in May and #4-7 in August; and now Well #5-7 has started this month. The wells have been drilled to an average depth of 5,000 feet in three different formations: the Echegoin, the Diatomite and the Olig Potter; and, in every case, encouraging signs of sweet crude oil and gas reserves have been encountered. Slowed initially by the need for water disposal, a hydraulic fracturing program and infrastructure completion, MAXIM and Orchard have completed an on-site water injection system and other basic production facilities, allowing them to start a realistic production program that has already sent over 2,200 barrels of sweet crude to market in June and July despite an incomplete infrastructure.
"We feel extremely fortunate to be drilling in so rich a field," stated a MAXIM spokesman. "We anticipated at the start that the initial 300 wells we planned at Sledge Hamar would ultimately and conservatively produce an average of at least 100 barrels of sweet crude oil and gas equivalent per day. Now, we look to production exceeding 500 barrels per day shortly; and by year-end, when everything is running at full production, hope to exceed our initial
projections for the Sledge Hamar field to possibly double that number."