The lease is located in the Boyle Field, an oil field that has produced nearly 1.3 million barrels of oil. Avalon conservatively estimates that the field contains a similar amount of remaining oil reserves and 242,900 mcf of gas.
Avalon and Canyon Creek will hire an engineering firm to oversee the implementation of a water flood project to recover the maximum amount of oil from the reservoir. Once the water flood procedure is fully operational, Avalon projects monthly cash flow--assuming prices of $60/barrel of oil and $6.50/mcf of gas--at nearly $500,000, after deducting for lease royalties, operating expenses, and taxes.
Avalon plans to drill and complete 10 additional wells during the next 12 months to further develop the oil reserves. Oil production is projected to reach 1,000 barrels of oil per day when the lease is fully developed.
Canyon Creek is a subsidiary of Universal Property Development and Acquisition Corp..
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