"We are convinced in this day of equipment shortages, this purchase has significant upside implications for the Company, its shareholders, drilling partners and royalty owners as we can very materially speed up our exploration and exploitation," said F. Lynn Blystone, president and chief executive officer.
"For example, we recently acquired a property that came with three independent engineering reports with estimates averaging 24 million barrels of undeveloped oil (based on old recovery methods) in just one zone. The Securities and Exchange Commission only recognizes proven producing properties for filing purposes so we will get busy and begin to put that undeveloped category into production for official recognition as well as increasing revenues. Further, we expect modern techniques will swell the property's ultimate recovery and rate. We are dealing with 500 feet of oil saturated zone in this particular instance," Blystone said.
Joseph R. Kandle, president of the Company's operating subsidiary, Tri-Valley Oil & Gas Co., has many years experience running the drilling operations of other companies as well as Tri-Valley and put together Tri-Valley's drilling division. Day to day operations including crew supervision will be run by Randy Stafford who, until his recent joining with Tri-Valley, had his own successful drilling and production service and crews.
The production rig component will be available to workover Tri-Valley's existing wells this quarter. The component for drilling to 8,000 feet will be available the first quarter of 2006. Kandle noted that purchase of another property with more than 40 existing wells is pending and the rig is capable of drilling infill wells on all of its properties including the pending purchase.
"We will still go to contractors to drill deeper wells but won't have to twiddle our thumbs in between rig availability. This will greatly accelerate production cash flow and the achieving of our immediate goal of having at least one producing barrel of oil equivalent behind every Tri-Valley share as we certainly have the property inventory to do that," Kandle said.
Tri-Valley recently advised that it would drill 10,000 foot appraisal wells on two recently acquired properties to test zones that are productive nearby but have never been tested on its new properties. These wells will be drilled by contractors with bigger rigs when available. But the Company can keep its own rig busy reworking existing wells and drilling infill wells to ramp up production and revenue while waiting on larger rigs.
Tri-Valley now has more than 100,000 acres of prospective mineral interest, a proprietary worldwide geologic library with some 700 California leads and prospects along with more than 20,000 line miles of digitized seismic data enabling it to rapidly evaluate prospects in every onshore basin in California.
"Most people are unaware that just the Bakersfield region alone produces more that three times as much oil per day as the entire State of Oklahoma or Wyoming. The deeper potentials of the area are huge and practically unexplored and it is a perfect place for Tri-Valley as an independent wildcatter to explore for big, new targets while developing production on its increasing property position. Certainly the price and market are right and we have the inventory, personnel, cash and equipment to support our simple corporate mission statement which is to increase the value and liquidity of our shares," Blystone said.
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