Saxon Oil Company Ltd. is pushing ahead with development plans for Italy. Earlier this month Chapman Petroleum Engineering, Ltd. completed a National Instrument 51-101 compliant report on the prospective resources of Saxon's twenty percent (20%) interest in the Corte dei Signori and Ponti Dei Grilli permits in Italy. Prospective resources are defined as those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. There is no certainty that the prospective resources will be discovered. If discovered, there is no certainty that any discovery will be technically or economically viable to produce.
Richard G. Green, president and CEO of Saxon, stated, "After an in-depth review of the Chapman report, I'm even more excited about our opportunities for developing gas reserves in Italy. Each of our permit areas contains multiple potential prospects - and each prospect in these license areas statistically could contain net reserves equivalent to the current proven reserves of the Company."
Chapman's report assigns a best estimate undiscounted cumulative cash flow of $50 mm USD net to Saxon's interest for each field discovered within the prospect areas. Each permit area could contain multiple fields. Saxon acquired these interests in June 2007 through the acquisition of 20% membership interest in AleAnna Resources LLC ("AleAnna"). The estimated values disclosed do not represent fair market values but represent the undiscounted future cumulative cash flows for the prospective resource estimates in each field.
Chapman's 51-101 report evaluates the prospective resources of only two of eleven permit applications submitted by AleAnna. The Corte dei Signori and Ponti dei Grilli permits evaluated by Chapman are included in AleAnna's Phase I development plan. Chapman's report indicates that new gas fields discovered on these prospects are estimated to range in size from 8.5 to 200 Billion cubic feet ("BCF") of recoverable sales gas with the best estimate for a new field discovery being 41 BCF of recoverable sales gas.
In mid-February the Company released the independent third party reserve report of Saxon's domestic producing properties prepared by LaRoche Petroleum Consultants Ltd. assigning a Present Value discounted 10% of $18.5mm to Saxon's existing domestic reserves as of 12/31/07. This report contained no values for Saxon's interests in Italy or for Saxon's wholly owned subsidiary Central Kansas Gas Gathering Company ("CKGG"). Saxon owns working interests in 102 producing wells.
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