Blue Ridge is participating with a 17.5% working interest in a large Texas onshore exploration program which it expects to be the foundation for its drilling activity for the next several years. The centerpiece of this program will utilize a large onshore Texas seismic database comprising approximately 48,000 miles and covering 100+ counties of the Texas Gulf Coast, East Texas, and South Texas. The great majority of this data has never been offered in the "public domain" and was acquired by a major oil company thought by Blue Ridge to be primarily exploring for large deep targets, which is not the goal of the current seismic reprocessing program.
Blue Ridge Energy Inc. has paid approximately $1.0 million as of June 30, 2002 and is committed to pay approximately $1.3 million more for its portion of the costs to reprocess this seismic data to look for shallow "bright spot" prospects, primarily in the Miocene, Frio, Yegua and Wilcox formations. The validity of using advanced technology to reprocess data and find additional drilling prospects analogous to nearby known producing fields in the same producing trend is well accepted by the oil and gas industry.
Originally, Blue Ridge's partners announced that they anticipated a minimum of 50 drillable prospects would be identified from 250 prospect leads after 100% of the seismic data had been reprocessed and interpreted (reprocessing is expected to be completed by September 2003). However, with over 25% of the seismic data processed, almost 150 prospect leads have been identified from which 50 new prospects have been developed, achieving their goal with a substantial amount of seismic yet to be viewed. Blue Ridge Energy anticipates several additional plays will be identified as reprocessing and review continues on the balance of the data.
These prospects range from 3,000 feet to 13,000 feet in depth, include both exploratory and development wells. The second and third prospects have been funded for drilling and testing and Blue Ridge expects commencement of drilling activities to begin shortly.
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