Alaska's North Slope area is a prolific basin with 23 producing fields that produce 16% of the domestic oil supply for the US at a rate of over 800,000 barrels of oil per day.
Fox engaged LAPP Resources, Inc. to prepare a geological report on the Alaska North Slope leases. Based on well production within and around Fox's Alaska acquisition targets, the April 2007 LAPP report estimated the leases could represent up to 160 million barrels of oil or $9.92 billion at $62/barrel. Fox will issue 20M restricted shares in exchange for the lease rights.
The larger of Fox's two lease target blocks, the East Prudhoe Bay Unit, borders and lies partly within Prudhoe Bay, and within close proximity to major players such as Exxon Mobil, BP, Chevron and ConocoPhillips.
The majority of the North Slope's production comes from the Prudhoe Bay Field, the largest oil field in North America at over 200,000 acres. Prudhoe Bay, with roughly 1,100 active well sites, has produced over 10 billion barrels of oil equivalent to date and averages production in excess of 400,000 barrels of oil per day.
The LAPP Resources report concluded that the hydrocarbon prospectively of Fox's target East Prudhoe Bay Unit area is highly encouraging based on the production of two analog wells: the Delta State 2 Well producing oil within the Fox lease block, and the Foggy Island Bay State 1 Well producing oil and gas after being drilled by AMOCO about one-half mile to the east.
The Pipeline State 1 Well, located in the southeast corner of Fox's target second lease block, the ARCO Pipeline Unit, recorded oil and gas shows but does not show the results of any tests. Fox's target ARCO Pipeline Unit is located nearest the key transportation infrastructure of the Trans Alaska Pipeline and Alaska's all-weather Dalton Highway, allowing any possible discovery on the Company's holdings to have the advantage of being near transportation, according to the LAPP Resources report.
Once it completes the acquisition, Fox intends to conduct a technical work program using the existing surface and sub-surface data in the region to facilitate a better understanding of its hydrocarbon potential.
"The proximity of our site to major oil and gas players, fields, and current infrastructure, combined with the site analog wells and the resurgence of interest in Alaska by several of the majors, gives us confidence in the potential of this lease acreage. We intend to identify and drill several exploration-type wells soon after our initial G&G program is completed. This will allow us to identify the best prospects available," says newly appointed Chairman, Richard Bullock.
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