Chancellor Group has acquired 16 additional wells.
The wells are in Hutchinson County, Texas, approximately 15 miles from Chancellor's main operation in Gray County, in the Texas Panhandle. Chancellor owns over 100 oil and gas wells.
Chancellor bought the 16 extra wells through its fully-owned subsidiary, Gryphon Production. Purchase price was $150,000, for which Chancellor paid cash.
Chancellor Chairman, Maxwell Grant, said, "We are very pleased to announce this acquisition which we believe has excellent potential. As announced in our 8K we closed the deal on May 27, 2010 but waited until the change of ownership documentation was finalized with The Texas Railroad Commission, the oil and gas regulatory body in Texas, with whom we have a $250,000 bond and hold an oil and gas operator's license.
"The integrity of the wells have also now been tested. All but two of the wells appear to be equipped with pump jacks and down-hole rods and tubing. There are 15 potential producing wells. The other well is a water disposal well. Whereas it may not be possible, on the law of averages, to bring the whole 15 of the shut-in wells back on, we believe 10 at least is not an over-optimistic figure.
"Some electrical work has to be done and has already been started. Some new flow lines will have to be laid but we are hopeful the restoration of this field will be very much a 'pay-for-itself-as-it-goes' proposition. They are the sort of propositions we like.
"We moved one of the two rigs we own onto the property this week to begin work-overs.
"Another attraction to us with this field was when we discovered, on our initial inspection, overgrown with grass, an old gas system. We believe we can bring this back on line with minimum effort and cost. Gas in our area traditionally attracts a premium. On our Gray county property we currently get $10 -$11 per thousand cubic feet because of the high BTU content. There is no guarantee this new property will yield the same price but we do expect to get the gas system running again in a relatively short space of time.
"After a period of consolidation and reorganization, this marks a new growth phase for the Company. We now have a fully integrated oil and gas business, including a 15.9 acre yard and huge shop with two rigs and all the associated large trucks and heavy equipment necessary.
"We have no debt, paid cash for this latest purchase and are currently looking at another 'low-entry-price' business possibility. We will continue to try to get the best value purchases for our shareholders."
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