American Petro-Hunter has executed an agreement to acquire a 25% Working Interest for a second Kansas oil project thereby increasing the Company's growing energy portfolio.
The new project is called the "Brinkman Prospect" and is located in Clark County, Kansas, approximately 20 miles south of Dodge City, encompassing 1,760 acres straddling the Clark-Meade County line.
The project is proximal to historic oil production primarily from Marmaton Limestone with secondary objectives in the Morrow Sand. Of significance, over 49,000 barrels has been produced from a seismic anomaly to the northeast of the chosen drilling location as well as Langdon Sands that has produced cumulative gas production in excess of 1 BCF. The prospect will be drill testing a structure associated with the Marmaton delineated by 3D seismic targeting both light oil and natural gas.
The 1,760 acre block contains a potential multi-well program with the first well location to be drilled designated as the #1 Lee 18AB well. The operator of the project, S&W Oil & Gas, LLC of Wichita, Kansas plans to spud the first test well on or around July 15th dependent upon rig availability.
Engineering estimates place the potential production from the indicated pay zone at between 40 and 100 barrels per day along with associated natural gas from a successful well. Full development of the field could produce between 300 and 400 BOPD of 44 degree light oil. There is excellent transportation and support infrastructure in the area.
Under the terms of the agreement, the Company has paid to S&W Oil & Gas, LLC of Wichita, Kansas as vendor of the play a total of $22,833.28 for land acquisition, leasing and seismic costs for the 25% Working Interest. In addition, the Company would pay a further $56,466.66 to cover dry-hole cased drilling costs associated with the first exploratory oil well and 25% of all further going forward costs such as completion and related infrastructure costs. If a successful commercial oil well is established, the Company will receive an 81.5% Net Revenue Interest (NRI).
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