Schlumberger log analysis indicates three potential Escondido pay zones over 162 feet of gross pay at depths of 6318 to 6480 feet, production casing was set to 6,670 feet. The log analysis further confirms the Escondido reservoir, which was discovered in the Cooke No. 3 well in 2005. The Cooke No. 3, which is a gas driven reservoir, had initial production of 188 barrels of 47.1-degree API oil and 150,000 cubic feet of high BTU gas. This well is still naturally producing from the Escondido formation after 18 months.
The Company is reviewing several new drilling locations for further expansion and development of the Cooke Ranch Escondido reserves. Current field operations are focused on work-over programs on shut-in production and re-completions. Regional weather conditions at the Cooke Ranch have significantly contributed to production issues and delays, with over 30 inches of rain reported in the last month causing major access difficulties to the well-sites and with field operations.
The Company has executed an extension to its recently announced letter of intent to purchase all of the stock of a privately held corporation owning certain producing interests, principally in the East Thirteen Field, located in Frio and Dimmit Counties Texas, for $5.3 million in cash and 500,000 shares of Paxton common stock.
The letter of intent proposes the fundamental terms for the purchase by Paxton of working interests in 17 gross (nine net) producing oil and gas wells and the associated proven un-developed locations and un-drilled acreage. Paxton has the option to increase the percentage working interests to be acquired in specified wells according to an agreed pricing formula.
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