Under the terms of the deal, the Company will be granted the net revenue from a 12.5% working interest until full return of its drilling and completion costs, at which time the Company's working interest will revert back to 10%. Rife Energy Operating, Inc. (REO) of Fort Worth, Texas has been designated operator for the project.
The drilling and logging of the Powell #1 has been completed and the drilling of the other two wells is scheduled to begin in early February 2006. On December 13, 2005 a series of logs were run on the Powell #1 well. The evaluation of these logs coupled with strong gas shows and indications of a significant natural fracture system suggest that the Powell #1 could produce significant volumes of oil and gas from the Barnett Shale. The well also had good oil shows in a conglomerate formation just above the top of the Barnett Shale. This conglomerate formation has produced several million barrels of oil in Montague County.
The well will be hydraulically fractured in early February 2006 to supplement the existing natural fracture system. Reserves will be determined after the well performance has been evaluated.
The transaction between the Company and REO was handled by AmTex Associates, LLC, members NASD, SIPC, of Dallas, Texas. AmTex Associates specializes in providing direct participation oil and gas programs to industry, institutional and individual investors
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