Lexaria has completed the purchase of additional interests in its existing core producing Mississippi oil and gas fields.
On April 3 Lexaria paid cash to purchase an additional 2% working interest (WI) in the proven Belmont Lake oil and gas field and an additional 10% WI in potential nearby exploration wells, bringing its total interests to 32% WI in Belmont Lake, and 60% WI in the exploration wells on approx 140,000 acres surrounding Belmont Lake in all directions.
The producing assets will immediately contribute to monthly cash flow. Belmont Lake has proven reserves of approx. 400,000 barrels of oil which could be increased through additional development. The Company is paying approximately $46,500 in total, or $6.00 per barrel of proven reserves for this incremental increase in working interests.
Separately, the Company reports that the two existing producing wells in Belmont Lake have stabilized production at a combined rate of approx 130 bo/d. These wells have been flowing constantly since October 2008 and since then have together produced nearly 23,000 total barrels of oil. The Company believes that additional development wells of this field can significantly increase total field production.
The PP F-52 well located some 9 miles north of the Belmont Lake oil field produced roughly 20 bo/d before inclement weather forced a seasonal temporary interruption of production.
Lexaria believes that pursuing exploration in the region around the Belmont Lake discovery could produce increases in shareholder value. The approximately 140,000 acres come with significant 2D and 3D seismic with a replacement value in excess of $25 million. There have been other producing oil fields with similar formations to the Belmont Lake discovery in the area.
The Company has been relatively lightly affected by the global economic environment, with the major affects those of lower oil and gas prices, and more difficult financial market conditions inhibiting expansion and growth.
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