The primary producing asset, OOO Nizhnyomrynskaya Neft, is a Russian limited liability company, acquired for US$1.5 million in cash and is located close to the Company's existing producing properties in the region.
OOO Nizhnyomrynskaya Neft owns a subsoil license which has been in production for over 20 years. According to the Russian State reserves body, the license of this asset is credited with approximately 25 million barrels of C1-C2 reserves. The license is currently producing approximately 350 bopd. Reserves and production of OOO Voivozhneft and OOO Verkhneomrynskaya Neft are not significant.
As planned, the Company will now initiate a basic program of workovers to replace pumps and re-start production from several older wells, as well as employ DeGolyer and MacNaughton to re-evaluate the reserves. Based on the Company's experience, the re-evaluation of the reserves normally results in a lower quantity of reportable recoverable reserves than is recorded by the Russian State reserves body.
William R. Thomas, Chief Executive Officer, commented:
"This is another example of our ability to make strategic acquisitions at attractive prices and we continue to make progress in our quest to build Urals Energy into a major independent player in Russia and the CIS. Our strategy of acquiring producing and non-producing assets near existing fields with development and exploration potential will enable the company to continue the fast track growth achieved to date."
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