Entek Energy has provided a quarterly report for its Gulf of Mexico activities for the period ending September 30, 2008.
Gulf of Mexico -- Award of Block 252, Main Pass Area, South & East Addition
During the Quarter, Entek increased its Working Interest in Main Pass Area, South & East Addition, Block 252 (MP-252), to 100% with a Net Working Interest of 77.75% (after royalty interests including Federal Royalty). MP-252, located in 77 meters (253 feet) of water, contains a proven, but incompletely produced natural gas reservoir 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).
MAIN PASS 252 -- RESERVES ESTIMATE
At the request of Entek, Ryder Scott Company prepared an estimate of the reserves, future production, and income attributable for the Main Pass 252 Block (El Capitan Prospect). The El Capitan Prospect is defined by:
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.
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 to Entek. The project life to produce the Probable and Possible Undeveloped Reserves could potentially extend beyond 8 years.
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.
The Company's current cash position plus ongoing revenue generated from High Island Block 24-L production is expected to provide sufficient working capital to meet this obligation after farm down of the Company's current 100% working interest. The level of farm down is yet to be determined.
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 un-produced reservoir. Production would be tied back to existing production facilities nearby.
Gulf of Mexico -- GARDEN BANKS 115 BLOCK
Entek has carried out further evaluation of the Cascade Prospect during the Quarter. Following data quality adjustment, the chance of geological success has been upgraded from 49% to 85% by Entek's geological and geophysical consultant.
The Cascade Prospect is ready to drill in the Garden Banks 115 Block:
Entek holds a 100% working interest (WI) in Garden Banks 115 and is currently discussing farm-out options with its consultants in the USA.
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