The Company agreed to transfer and assign all of its right, title and interest (being a 25% back-in interest) in and to certain oil and gas wells located in Oklahoma that were previously acquired by US Oil and Gas Resources Ltd. ("USR") pursuant to an agreement with Oak Hills signed in February 2003. Reference is made to TransAmerican's News Releases dated April 29, 2005 (as amended June 30, 2005) and August 15, 2005 for particulars regarding the acquisition by the Company of 100% of USR's real and tangible personal property interest (including working interest, net revenue interest and overriding royalty interest, if applicable) in certain oil and gas fields located in Alberta, Oklahoma, Texas and Mississippi.
The Company has granted a back-in right to Oak Hills to acquire 10% of TransAmerican's interest in and to the Comanche well that was previously acquired by USR from Oak Hills pursuant to the USR Agreement. If the back-in right is exercised, TransAmerican and Oak Hills have agreed to enter into a joint venture agreement for the exploration and development of the Comanche Well and Leases.
History of Comanche Wells
According to records received by the Company from Oak Hills and USR, the following information and history was reviewed prior to the acquisition of the Comanche Well and Leases.
In the late 1970's and the early 1990's, in response to an extremely high gas price being offered for deep gas wells and advances in drilling technology, a drilling boom occurred in Caddo and Comanche Counties, Oklahoma. The goal of this drilling was the deep Goddard and Springer sands; these sands occur at depths ranging from 18,000 to 21,000 feet. The Springer and Goddard sands are large, massive sands deposited in the deep Anardarko basin with a general northwest-southeast developing trend. It should be noted that the porosities of these sands tends to be low (4-8%), although well logs show exceptional gas effect.
The Comanche #1-7 was drilled by Saxon Oil Company in Section 7-T4N-R9W, Comanche County, Oklahoma. This well was spudded on January 4, 1980 and drilled to a depth of 21,500 feet. The Boatwright (Springer) and Goddard formations (20,966 to 21,156 feet) were tested and fraced. However, the well blew out during the flow back and testing of the frac and was lost after reporting flow rates of over 50 million cubic feet per day, and was subsequently plugged and abandoned. Saxon Oil Company then proceeded to spud a re-drill, and started the Comanche #2-7 on May 17, 1981, drilling to a depth of 21,954 feet. The well was perforated in the Lower Goddard at 21,094 to 21,413 feet where commercial flow rates were encountered. Two bridge plugs were placed above this perforated interval. This well was completed in August 1982 in the Boatwright and Goddard formations (20,117-20, 483 feet), with an initial flow rate of 3,300mcf per day. This well has produced 362, 360mcf from this completion, and was temporarily abandoned by Kerr- McGee in 1999. The well was placed back in production in early 1999 by and produced initially at a rate of 100 - 200mcf per day before becoming uneconomic due to the high cost of water disposal.
The Company intends to begin evaluating the potential of the Comanche #2-7 to determine the possibility of directional drilling, stimulating, and or fracing zones that have never been treated or developed in the either the Comanche #1-7 and or #2-7. In addition the Company will investigate the feasibility of removing the bridge plugs above the Lower Goddard perforations at 21,094 feet to 21,413 feet, where a flow test of 4 million cubic feet per day was reported before it was abandoned to move to the Upper Goddard and Boatwright formation.
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