Entek Underscores Reserves Estimate, Income for El Capitan Prospect

At the request of Entek Energy Limited, Ryder Scott Company prepared an estimate of the reserves, future production and income attributable for the Main Pass 252 Block (El Capitan Prospect) awarded to Entek’s wholly owned subsidiary, Entek USA General LLC, following the Central Gulf of Mexico Planning Area Sale 206 held in March 2008.

The El Capitan Prospect is defined by:

  • 3D seismic over the Prospect.
  • 6 well penetrations within the Prospect and numerous other well penetrations in adjacent block MP 252.
  • Production history from the "L" Reservoir of 100 BCF from the Prospect.
  • Analog production in the "L" Reservoir in block MP 255 which has produced in excess of 290 BCF.

Ryder Scott’s Report estimates Proven Undeveloped Reserves of 7.285 BCF, sufficient to produce cash flows to fully recover the development costs of drilling and completing two development wells and connecting these wells to an existing platform near to the proposed well sites plus providing Entek with surplus cash flow (after Royalties and Operating Costs) of US$20.459 million (or US$14.951 million discounted at 10%).

The revenue stream from the Proven Undeveloped Reserves is estimated to be recovered over a four year
project life.

The addition of Probable and Possible Undeveloped Reserves of 31.567 BCF have the potential to deliver additional surplus cash flow (after Royalties and Operating Costs) to Entek of US$172.8 million (US$120.1
million discounted at 10%).

The project life to produce the Probable and Possible Undeveloped Reserves could potentially extend beyond 8 years.

Entek currently holds a 75% Working Interest in MP 252 (58.44% after ORRI).

MP-252, located in 77 meters (253 feet) of water, contains a proven, but incompletely produced natural gas reservoir (El Capitan Prospect) at the relatively shallow depth of approximately 2,438 meters (8,000 feet), plus a second proven natural gas reservoir, but in this case never before developed, at approximately 2,103 meters (6,900 feet).

It is planned that a high inclination well to approximately 2,438 meters (8,000 feet) will be drilled to re-tap
the incompletely produced reservoir. Initial costs of this well are assessed at US$5.6 million (Entek share
US$4.2 million should the Company retain a 75% Working Interest).

The Company’s current cash position plus revenue of approximately A$700,000 per calendar month is anticipated to provide sufficient working capital to meet this obligation. Entek’s full economic evaluation of the reserves is based upon a two well development, the second well designed to accelerate production of the incompletely produced reservoir and also tap the proven but unproduced reservoir. Production would be tied back to existing production facilities nearby.



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