Cubic Finds Probable & Possible Reserves in Cotton Valley
Cubic Energy reported results of a reserve evaluation limited to the Cotton Valley formation in its Johnson Branch acreage. This evaluation was completed according to the rules and definitions put forth by the 2007 SPE/WPC/AAPG/SPEE Petroleum Resource Management System; and was based on the evaluation of six wells that have reached total depth. Cubic has now reached total depth on its seventh well and is currently drilling its eighth well in its Johnson Branch acreage.
The results of this evaluation, effective October 1, 2007, quantify estimated net probable and possible reserves for the Cotton Valley in this specific acreage block. Providing this evaluation may be useful as a comparative point of reference to other publicly traded companies with exposure to natural gas "resource plays". Investors should note, however, that the Company cannot include information about unproved reserves in its filings with the Securities and Exchange Commission ("SEC").
Cubic engaged The Scotia Group ("Scotia") to evaluate the reserves on a well-by-well basis using analogy. Analogous reserves are based on the decline characteristics of type curves and initial rates determined by petrophysical analysis and analogy to nearby producing wells. All reserve estimates were constrained by original gas in place calculations. This evaluation of Cubic's net reserves and future cash flows relates only to the Cotton Valley formation and is based on prices of $60.59 per barrel of oil and $6.56 per MCF of gas.
Probable Reserves total 2.2 Million BOE and Possible Reserves total 3.4 Million BOE. The process of making these estimates is complex and based on interpreted data and assumptions that may prove to be inaccurate. Furthermore, different engineers may make different estimates, and the same engineer's estimates may change over time as new data becomes available.
The aforementioned results are only for Cotton Valley reserves. Potential pay sands in the prolific Hosston Formation will be tested when these wells are completed.
Cubic continues to rapidly develop its infrastructure in Johnson Branch with approximately 12 miles of gathering lines and pipeline constructed for its wells and upcoming completions. A common point and compression facility is currently being built and should be operational in approximately two weeks.
Cubic Energy, Inc. is an independent company engaged in the development and production of, and exploration for, crude oil and natural gas. The Company's oil and gas assets and activity are concentrated primarily in Texas and Louisiana.
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