The Company continues its production and completion efforts on the Oliver Unit #1H horizontal Barnett Shale well in Tarrant County, Texas. The Company has conducted both perforation and fracture stimulation ("frac") of the Barnett Shale production zone, as the well continues through completion stages. The three-stage frac was conducted by Frac Tech Services, LLC to stimulate gas production for marketed gas flows.
The frac fluid that was pumped into the well at high pressure will now be flowed back over the next 2-3 weeks to allow final well completion and hook up to a pipeline for gas sales. A work over rig is scheduled to aid in the flow back of fluid in the well.
The Oliver lease was acquired by the Company with a 100% working interest and a 70% net revenue interest in the 312 acres obtained. The Barnett Shale gas target is estimated by management to be approximately 350 to 375 feet thick, according to offsetting wells drilled by Encana Oil & Gas Inc., and XTO Energy, Inc.
The Company is concurrently drilling a Coal Bed Methane "CBM" gas well on its South Lamar lease in Oklahoma. The Peyton 1-25 vertical CBM well on the Company's South Lamar lease in Hughes County, OK is encountering shallow gas zones on its path to the targeted Hartshorne Coal zone estimated to be approximately 2,800 feet deep. The shallow gas zones are being analyzed for production potential. Lexington Resources and Dylan Peyton, LLC, are participating on a 50/50 equal working interest basis on this well as part of their joint exploration operations in the Arkoma Basin in the State of Oklahoma.
Company President, Grant Atkins commented, "After taking the time to acquire high quality lease inventories in both Oklahoma and Texas, we have subsequently established vertically integrated operations through our subsidiary oil and gas operator, Oak Hills Drilling and Operating, LLC. We are now drilling and completing wells on our own schedule using our own quality control. Lexington Resources is entering a new stage of growth where all that has been put into place provides the basis for rapid increases in production, sales, and reserves."
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