Each block covers an area of 320 acres and each contains an oil field that was drilled and produced in the 1940's. The fields are expected to have several million barrels of 15 (0)API sweet crude oil remaining in place. California Oil & Gas has a 50% working interest in these lands (320 acres net) and will act as operator.
Based on data available from the previous production, the oil is contained in highly porous and permeable sandstone reservoirs at depths of 1,200 feet to 2,750 feet, and wells should therefore be relatively inexpensive to re-enter or to drill. Management expects that modern exploration and production methods should allow significant production to be recovered from these reservoirs.
These acquisitions increase the Company's exposure to the San Joaquin basin. Robust oil prices, nearby markets, availability of services, existing infrastructure geared to heavy oil production and refining, all in an area where little modern exploration has been carried out in a prolific oil-prone basin make this an attractive place to explore and develop. Successful wells can be expected to be brought into production quickly.
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