The first property is a 7.42% WI (NRI 5.38%) interest in a gas field. The current gross production is approximately 3.0 million cubic feet of gas and approximately 270 barrels of condensate per day. The field covers 320 acres and is located in Allen Parish Louisiana.
The second property is an oil field is located Calcasieu Parish, Louisiana and comprises approximately 800 acres with 5 producing completions from 4 wells. Current gross production is about - 738 barrels of oil and 567 thousand cubic feet of gas per day. The field has one development location for further production enhancement. The ownership working interest to be acquired is 11.76% with an 8.47% NRI.
The Company has agreed to pay an undisclosed sum for the interests in the two oil and gas fields. The acquisition has an effective date of January 1, 2006 and completion of the acquisition is scheduled for February 28, 2006. The acquisition will be structured in a Joint venture entity with funding anticipated from a New York-based financial institution. Details regarding ownership percentages of the joint venture are being negotiated.
An independent reserve report has been prepared by R.A. Lenser and Associates which has attributed a pre-tax, 10% discounted value of approximately US$9.8 million to the Proven Developed Producing (PDP) reserves of the two properties, using a $50-oil and a $7-gas price. PDP-reserves are estimated to be approximately 218,000 barrels and 570 million cubic feet of gas net to the Company. Further Proven Undeveloped reserves are available in the Edgerly field.
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