On July 17, 2003 the Company announced drill log results from its first well in the area, the Ardis-Martin Timber Co. #1, indicating that there are 107 feet of pay in the Cotton Valley and 186 feet of pay in the Hosston sand formations in that well. The Company expects that a pipeline connection will be completed the week of August 4th and that the well will undergo staged perforation and fracturing techniques for approximately one month.
In other news, the Company is pleased to announce that Proteus Capital Corp., a New York-based corporate advisory and research firm, has completed an analysis of the De Soto Parish property for the Company valuing the Company's interest in the project at approximately $136 million, based upon the report's assumptions and prevailing natural gas prices. The report was completed by Mr. Douglas Newby, President of Proteus. Mr. Newby in his career has completed analyses and undertaken investment banking assignments for numerous domestic and international oil and gas projects.
Mr. Newby completed an analysis of the projected value of the Company's interest in the project based upon 55 wells being completed on the project acreage over the next four-and-a-half years, and assuming a 90% drilling and completion success rate. These completion success rates are well within the historical norms experienced in wells drilled in both the neighboring Holly and Bethany-Longstreet fields. At assumed natural gas and oil prices of $4.50/mcf and $25/bbl, the PV10 of the pretax future cash flow net to the Company was estimated at $136 million.
The report did a comprehensive analysis of the production in the adjoining fields finding that to date, on average, nearly eight wells have been drilled in each 640-acre section in the Holly field, and about five wells per section in the Bethany-Longstreet field. However, continued in-fill drilling by the operators in those fields leads the Company and Mr. Newby to conclude that the number of possible wells in each section is closer to ten, thus allowing for nearly sixty wells on the acreage controlled by the joint venture, which is more than double the number of wells projected in the July 17, 2003 news release. The report also noted that the typical well in the two fields studied has produced on average 4.2 BCF of gas to date. However, since the Company has not yet completed its first well, the results achieved may differ from those achieved in the past by other operators.
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