OP Inc. requested that one of the leading oil and gas consultancy firms, Netherland Sewell and Associates, Inc. (NSA) from Houston, Texas independently determine the current oil and gas reserves at the company's South Belridge Project. The results from the NSA report are the following:
--The gross proven and probable (2P) reserves at the South Belridge field is about 6.9 million barrels (mmbbls) of oil and about 39.7 billion cubic feet (BCF) of gas. Taking in to account Orchard's various interests in the South Belridge field, Orchard estimates that its share of the gross 2P reserves at South Belridge is about 6.8 mmboe. --The gross proven, probable and possible (3P) reserves at the South Belridge field is about 17.0 mmbbls of oil and about 124.1 BCF of gas. Taking in to account Orchard's various interests in the South Belridge field, Orchard estimates that its share of the gross 3P reserves at South Belridge is about 19.3 mmboe. The reported reserves are only for the South Belridge Project. These reserve figures do not include the Forbes Gas Project in Sacramento where Orchard has current gas production. The report also does not include the oil and gas discoveries at South East Lost Hills Project in the San Joaquin Basin which are currently undergoing further appraisal and production testing.
Orchard had earlier announced a 20 well drilling program. A 10 well drilling campaign is scheduled at the South Belridge Project commencing in late September and is designed to add to the reserve base and increase production. A 6 well program is also planned for the Forbes Gas Project starting around the same timeframe. A new 2 well exploration program at the Turk Anticline Project is planned to start before year end along with an additional two wells at other project sites.
The Executive Chairman of Orchard, Steve Graves, said:
"Orchard is very pleased to be recording its first independently studied reserves at South Belridge. The results reaffirm our expected potential for this exciting project. Given the very high gas prices in California along with current high oil prices, the value of the reported reserves at South Belridge on a per share basis provides a significant base to our current share price. And we also have eight other projects in various stages of development that are expected to further increase our valuations.
"In addition, Orchard is in the final phase of increasing the South Belridge Project's overall drillable acreage by adding another 15% more wells to the project's scope. The expected increase in well count will most likely increase South Belridge reserves on subsequent reports and further add to the valuation base.
"Orchard has already drilled some 13 wells in the South Belridge Project area, giving the company a better understanding of the benefits provided by this first of many projects we plan on moving into production.
"While the reserve levels determined by NSA are in our view conservative as compared to our internal calculations for South Belridge oil and gas reserves, it does provide an independent confirmation of our reserve base and expected values."
The participants in the South Belridge Project are: OP Inc. (50%, operator) and Maxim TEP, Inc. (50%).
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