Stallion to Participate in New Oil Discovery in Mississippi

The Stallion Group reported that the Company has entered into an agreement to participate in all future drilling and exploration in a new oil discovery in Mississippi. The recent discovery, known as the Belmont Lake Oil Field, is located on a 164 acre lease. Stallion also holds a gross 40% working interest in future wells in the Palmetto Point area, which surrounds all sides of the Belmont Oil Field.

Two exploration wells were drilled on the Belmont Lake lease in 2007. Both wells, PP F-1-12 and PP F-12-3, have been producing at rates exceeding 100 barrels per day. Additional drilling in the Belmont Lake area is expected to occur in the summer of 2008. Development plans for the field will likely include horizontal drilling. Horizontal drilling has resulted in substantial production increases as compared to vertical wells in comparable discoveries in Mississippi. The location and number of horizontal wells are currently being evaluated by the Company's Operators, Geologists and Geophysicists.

"Stallion is pleased to be able to participate in such a substantial oil discovery on lands not currently controlled by Stallion within its core interest area in Mississippi and Louisiana. With current oil prices near record levels, future discoveries in the Belmont Lake Field could substantially enhance production rates and cash flow for the Stallion Group," stated Christopher Paton-Gay, C.E.O.

Under terms of the Belmont Lake Oil Field participation agreement and Farm-out Agreement, Stallion will pay 10% of all costs of the first horizontal well to be drilled under the new 2008 drilling program to earn a 7% working interest; and furthermore Stallion will pay 10% of all costs associated with drilling the first vertical well under the new 2008 drilling program to earn a 5% working interest. Thereafter, all future wells drilled within the Belmont lands, Stallion will pay 5% to earn a 5% working interest.

Drilling on the Company's land in Mississippi and Louisiana is currently curtailed as was planned during the rainy season and high Mississippi River levels. The company will focus on bringing into production all successfully drilled wells in 2007. It is expected that cash flow from operations (excluding capital costs) will be positive by the second quarter of 2008. Drilling in Mississippi is expected to commence again in the summer of 2008.


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