Domain is providing 100% of the capital and project coordination for the re-completion program of up to 5 wellbores in each of 3 groups of wells. Following a review of the field data the team has identified one to three zones per wellbore to be completed or re-completed. Total additional gas in place is estimated at greater than 18 BCF. Capco has a working interest of 65% in the Field, which was discovered in 1966 by Shell and has produced more than 200 BCF. It is anticipated that the additional re-completions can be done at a rate of one to two per month.
Capco has 20 to 30 additional candidate wells in inventory from other offshore producing assets, which are currently under review by Domain and Capco for similar re-completion projects.
As part of the financing arrangements, Capco's revenue interest in the target wells will be directed to repayment of the investment provided by Domain. The revenue interest will increase as repayment is made, and upon Domain achieving a 2.0 multiple on invested capital, Capco will receive 100% of the remaining net interest cash flow.
Commenting for the Company, Mr. Chaudhary said, "We are very pleased to be working with Domain in this uniquely combined technical and financial model. The result on our first well is very encouraging. We expect to announce further improvements in Capco's balance sheet and cash flow statement as we pursue this campaign to increase future cash flow and shareholder value through the exploitation of our existing assets coupled with the deployment of our completion equipment."
Capco also announces the following operational updates:
a. Matagorda Island, Texas State Waters: Capco has a 100% WI in 6 wells in this area. The Company plans to re-activate production from at least 3 wells after certain lease issues have been perfected. Plans are to begin this process in the second quarter of year 2006. b. Chandeleur Area/St Bernard Parish, Louisiana: Capco has an after payout interest varying from 33% to 66% in 11 wells with current production levels of 11 mmcfd from 4 of the wells. Payout is expected in the second quarter of year 2006. The land holdings are about 8,000 acres gross. The potential exists to re-complete idle wells and drill developmental wells in this area. c. High Island 196, Federal Waters, Gulf of Mexico: Capco has an after payout interest of 66% in 4 wells in this block with current production levels of 0.8 mmcfd. Gross acreage holding is approximately 5,000 acres.
a. Orange Field, Orange County, Texas: In December 2005, Capco participated in the acquisition of a producing property with production of 125 bopd from 20 wells. The property has a total of 130 well bores in a 500-acre field. Capco has a 66% after payout interest in the field. Capco plans to commence workovers to return selected wells to production utilizing its Company-owned workover rig. b. Caplen Field, Galveston County, Texas: Capco has an average 62% working interest in approximately 6,000 gross acres and 11 wells in this property. Current production is about 30 BOPD from 2 wells. Further drilling and workover activity is underway to place other wells on production and also exploit the gas potential of the property. c. Slick Waterflood, Creek County, Oklahoma: Capco has a 50% working interest in approximately 2,700 acres with approximate current production levels of 20 BOPD from 11 wells. There are a total of 115 wells in this lease and the Company plans to continue to place additional wells on production. d. Bandwheel, Osage County, Oklahoma: Capco has 100% working interest in 1,300 acres of land with current production levels of 18 bopd. There are a total of 120 wells on this lease and the Company plans to continue to place additional wells on production. Capco is planning to lease some other synergistic leases in the area and drill a development well in 2006. e. Belridge Field, Kern County, California: Capco has a 20% working interest in a field which is currently producing 40 bopd from a newly drilled well and 3 old wells. In addition another new well has been drilled and completed. Production rates of this well are not available as yet. The Company is also attempting to lease certain heavy oil leases in the region.
In December 2005, Capco improved its balance sheet by extinguishing a third party guarantee and reducing accounts payable attributable to the cost of drilling the GA 297 well, where the Company had drilled a dry hole in mid year 2005. Funds for such activities were made available from insurance proceeds and assumption of a short-term debt.
The Company believes that with modest success in the Brazos 440L Field, combined with current offshore and onshore activities and reversion of interests, the net production to Capco's interest is expected to increase considerably.
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