One of the fields is located on a newly discovered fault block that is adjacent to 2 fields that have each produced 20 to 25 million barrels of oil. The management believes this acquisition is very strategic and has excellent cash generating value to the company.
"In addition to the acquisition of quantified reserves, there are a number of other productive horizons in the properties, which were not valued in this negotiated price," said Mark Neuhaus, TX Holdings' President and Chief Executive Officer. The company and the other "non-divesting" 50% partner will develop these properties on a "heads-up" cost basis.
To more fully implement production activities, the parties will begin by constructing a 3.5 mile pipeline to access the secondary gas market and drill a disposal well.
William A. Alexander, TX Holdings' in-house engineer, has projected that both fields have proven reserves of 619,700 barrels of oil and 6.04 Bcf of gas. These reserves are expected to generate a pretax present value cash flow, discounted at 10% (PV10), of $30,251,755 to the 100%. The corporate strategy is to begin production operations on the properties and then requisition third party engineering that can be used to further implement production activities on Company leases and leverage escalating values to pursue other acquisition targets currently being developed by management. The reserve estimates above are for proven reserves only and do not include probable reserves or reserves that may be added with the additional development.
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