TransAmerican Energy Inc. has entered into a participation agreement with Odyssey Petroleum Corp. to earn a 50% working interest (36% net revenue interest) in the Max and Martha Gill No. 1 well (the "Max Gill #1") located in Pelahatchie field, Rankin County, Mississippi. In consideration for this interest, TAE paid Odyssey the sum of US$942,000, being the turnkey drilling costs of this well to casing point. All other costs for completion of this well are the responsibility of the operator, being Odyssey.
TAE further announces commencement of drilling operations for the Max Gill #1. Rig equipment, substructure and rig have been delivered and spud date is scheduled for today.
The Max Gill #1 well is situated in Section 7 T5N R5E, Rankin County, Mississippi, approximately one mile north of the recently completed Harold Karges 1A well which was located in Section 18. Geologically, the well is to be drilled in the northern productive portion of the field, offsetting five wells that have produced from multiple zones in the Hosston, Mooringsport, Rodessa, Paluxy, and Tuscaloosa formations. The anticipated target depth for the Max Gill #1 is 11,500' well and is being drilled in the heart of the Pelahatchie Field where Odyssey has been successful in not only the continuation of development of known oil pays but also in proving the productivity of several additional oil pays previously untried by prior operators. Historically these formations have yielded initial production rates from 100-200 barrels of oil per day.
Geological mapping and engineering studies, together with recently acquired technical data from nearby offset wells, indicate that this well should encounter multiple productive oil zones. A recent reserve and economic analysis prepared for Odyssey by Oilfield Technical Services of Ridgeland, Mississippi (which was based on geological studies by Odyssey's geological staff) concludes that a well drilled in this location could ultimately yield approximately 1,000,000 barrels of oil and yield net cash flow of $21,845,973 over a thirty year life (using an average oil price of $55.00 per barrel). The reserve and economical evaluation report was prepared by Gus Sanders, Petroleum Engineer, a qualified reserves evaluator in accordance with National Instrument (NI) 51-101 and the standards set out in the Canadian Oil and Gas Evaluation Handbook. The reserves estimates were functions of engineering judgment and interpretation, based on data available as of the effective date of the report, being June 4, 2007. The reserves calculated by Mr. Sanders for this well, based on a 40-acre drainage area and further reduced by 25 per cent to account for wedging of the drainage volume, is 1,000,000 barrels of oil, which is classified as proved undeveloped.
Additionally, TransAmerican has negotiated the right to participate in the drilling of two subsequent locations in this field.
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