Under the terms of the purchase and sale agreement, and subject to completion of financing, Rancher Energy now has a definitive agreement in place that comprises a 100% working interest (approximately an 80% net revenue interest) in the Big Muddy Field consisting of approximately 8,500 acres in the Powder River Basin. The prospect is located in Converse County, approximately 15 miles east of Casper in the east-central region of Wyoming. The Big Muddy Field is analogous, from a geological perspective, to the nearby Salt Creek field, which is currently benefiting from a successful CO2 injection program by the Anadarko Petroleum Corporation.
In evaluating the Big Muddy Field as a CO2 miscible injection project, a recent third-party geological study by NITEC LLC ("NITEC") estimated the potential for recovery of approximately 25.5 million barrels of oil ("MMBO") from the prospect's Wall Creek formation, which has calculated original oil in place of 254 MMBO. The Big Muddy Field was discovered in 1916 and originally operated by Conoco. It has produced approximately 52 MMBO from several producing zones including the Wall Creek, Stray, Shannon, Dakota, Lakota, Muddy and Niobrara formations -- 32 MMBO produced from the Wall Creek formation alone. In addition to the NITEC reservoir engineering study an economic feasibility and reserve report was prepared by the Ryder Scott Company LP. Logistic requirements are supported by highway, railroad and river transportation lines running across the acreage.
This new acquisition significantly increases Rancher Energy's presence in the Powder River Basin. The Company currently holds interests in 10,104 gross acres in the nearby Burke Ranch Field prospect, which is also being evaluated for a possible CO2 injection program by NITEC in order to ascertain the fields' remaining recoverable oil. The Company also recently signed a Letter of Intent ("LOI") with Antelope Resources, Inc. ("ARI") of Casper, Wyoming to acquire 100% of the ownership interests (and 80% of the net revenue interests) from ARI in the East Teapot Dome Field in Wyoming's Powder River Basin. ARI's leases cover approximately 1,200 acres out of the 2,500 acre field, and recoverable reserves are expected to total more than 3.5 million barrels.
John Works, President of Rancher Energy, states, "The Big Muddy Field acquisition fits into Rancher Energy's corporate strategy of identifying historically productive assets that are strong candidates for additional production through state-of-the-art enhanced oil recovery techniques. As Rancher Energy's third and largest acquisition in the Powder River Basin, we are excited to increase our presence in this commercially active hydrocarbon-rich region of Wyoming."
Rancher Energy Corp. focuses on the oil & gas sector by specializing in evaluating older, historically productive fields in order to determine their potential for secondary and tertiary recovery. Management will determine the economics, and where viable, proceed with development of the assets into producing wells. Current high oil & gas prices alongside advances in technology make these assets an attractive source of potentially recoverable oil & gas reserves.
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