Project Drilling Program
The purchase will include a 1/8th interest in the eleven (11) horizontal wells that have been drilled to date. Three wells are currently drilling. The initial well, the Tritt, has been fraced and is producing and cleaning up at an initial rate of 1.7 mmcfg/d. The plan for the initial phase is to drill 36 horizontal wells in 2006. The most important facet of this project is that the operator has retained access for 3 drilling rigs for 3 years. This is possibly one of the most significant factors in the Barnett Shale play, as rig shortage causes a delay in investment, production and cashflow. A number of competitors are faced with expiring leases because they can't acquire drill rigs to validate their leases. Once the wells are drilled and completed, facilities must be built and pipelines installed before the wells are stimulated and put on production.
"The Company is pleased to have the opportunity to participate with Reichman Petroleum Corp., in this project," stated Mr. Fimrite, "The co-investors in this project include Neumin Production Company, (a subsidiary of Formosa Plastics Corporation), Kerogen Resources, Inc. and Wynn-Crosby Energy, Inc. (now merged with Petrohawk Petroleum Corporation). The high caliber of these participants reflect the quality of this project."
Barnett Shale Profile
The Barnett Shale reservoir in the Fort Worth basin was first discovered and developed by Mitchell Energy in 1981. The Mississippian silts and shales were deposited in a faultbound trough at depths between 7,000 and 9,000 ft. The Fort Worth Basin was formed on the southwestern flank of the Ouachita Over-thrust, and depositional patterns reflect the north-south trend of the basin axis. The aerial extent of the Barnett Shale is estimated to be 4,200 square miles. The play thickens from less than 100 feet in the west, to nearly 1,000 ft to the northeast. The shale displays local variations in physical and geochemical properties that are important in drilling, completing and stimulating the formation. The Barnett Shale is a black, siliceous source rock with 4-10% organic carbon content and no free water. The estimated total gas content is 100 BCF/sq mile.
"The combination of a well situated property with three rigs drilling continuously creates a unique and significant premium on this investment" stated Mark Bush, CEO of Pan American, "We believe that this will be a long term and profitable investment with very rapid capital recovery."
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