Avalon Oil & Gas, Inc. (Avalon) has completed its first production run in the Lake Washington Field and received its check for sale of oil in December. The first month's production run proved to be almost 40% higher than the company had projected. This increase in production, combined with much higher commodity prices, has increased the internal rate to over 35% on this recent portfolio acquisition.
Avalon acquired non-operated production in the Lake Washington Field in Plaquemines Parish, Louisiana, located about 60 miles south of New Orleans, effective November 1, 2007. The Lake Washington Field was discovered in the 1930's and is located around a shallow piercement salt feature. Since discovery, the field has produced approximately 350 million barrels of oil, putting it among the largest oil and gas fields in the United States.
Swift Energy Company, the operator of the property, reports replacing several of the oil storage tanks, during which time the field has been offline. As of the end of December, about 70% of the production was back online, with the remainder to return online shortly. Production levels are consistent with levels prior to the shutdown.
"We are extremely pleased with the initial production returns from the Lake Washington Field, and with Swift Energy's operation of this property" said Avalon's President and Chief Executive Officer, Kent A. Rodriguez. "Avalon's team has broad experience developing oil properties in the region, and has maximized this opportunity to refine our asset base with high margin properties, while adding significant development drilling opportunities," added Rodriguez.
The Lake Washington acquisition substantially increases Avalon's daily production of oil and gas. Avalon holds approximately 0.7% working interest in 3 producing units that are currently making over 1000 barrels of oil per day. Avalon also acquired like interests in surface production facilities and two salt water injection wells in the transaction.
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