Saxon announced that the 3D seismic program on the Corte de Signori concession area in Po Valley of Italy is being carried out by AleAnna Resources, LLC (AleAnna). Saxon owns a 20% membership interest in AleAnna.
The data acquisition began in early December in the southern portion of the concession and is proceeding northward across the region. Located south and west of Venice, this area of Italy is a relatively flat agricultural region with numerous drainage canals. Initial field processing is very promising and high quality information is apparently being gathered despite some weather delays. Seismic acquisition is expected to continue through January and February. Detailed interpretation is expected after additional processing of the seismic information in the second quarter of this year. Drilling could commence as early as the fourth quarter 2009.
The Corte de Signori concession was the subject of that certain Evaluation of Prospective Resources assessment by Chapman Petroleum Engineering Ltd. (Chapman) dated January 8, 2008 and effective as of January 1, 2008, conducted in accordance with National Instrument 51-101. That assessment concluded that Corte de Signori best estimate prospective gas resource was 6,323 million cubic feet (MMcf) per prospect net to the Saxon interest in AleAnna Resources in the permit area. The low and high net prospective resource estimates per prospect were 1,439 MMcf and 30,103 MMcf respectively. Economics run in that report at $10 per Mcf ($10,000 per MMcf) gas price calculated a best estimate present worth discounted at 10% net to the Saxon interest to be $25,712,000. The report assumed seismic would be shot in late 2008 and that drilling would commence in 2009 and continue in 2010 with production commencing in 2012. Saxon believes the basic timing assumptions have not changed.
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. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering and geological data and any conclusions or estimates by Chapman represent informed professional judgments only, not statements of fact.
Richard G. Green, president and CEO of Saxon, stated, "The sophisticated 3D seismic information currently being gathered will allow us to evaluate the shallow gas potential in this AleAnna permit area in the Po Valley of Italy. The management of AleAnna Resources has done an excellent job of assembling an experienced technical team to acquire the highest quality data on this concession. Our initial indications are the data is of high quality and may exceed expectations. We believe our attractive concession positions and ongoing seismic work program in Italy coupled with our recently announced acquisition of coal mines for gas extraction in Spain place Saxon in an excellent position to supply energy to Europe within the next several years. Given the recent turmoil in the European energy markets and recently announced gas contracts in the Po Valley exceeding $14 per Mcf, Saxon's positions in Europe are highly strategic and accretive to the value of the company."
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