Saratoga Resources announced that it was successful in acquiring three new leases at the Louisiana state lease sale, held on September 8, 2010 in Baton Rouge. Saratoga, through its wholly-owned subsidiary, Lobo Operating, Inc., acquired Louisiana State Leases 20433, 20435 and 20436, covering a total area of 535.61 acres. The leases are located in Breton Sound Blocks 18, 19, 50 and 51, close to Saratoga's existing facilities and pipeline infrastructure and within the blocks covered by Saratoga's previously announced acquisition of three-dimensional (3-D) seismic data. Saratoga has a 100% working interest in these three year leases, which all carry a 22% royalty burden.
Saratoga previously announced that it had entered into a 20 year seismic licensing agreement with Seismic Exchange (SEI) for 42.88 blocks of three-dimensional (3-D) seismic data, comprising approximately 400 square miles, located in the state waters of Louisiana. Saratoga presently holds licenses on close to 500 square miles of contiguous and continuous 3-D seismic data covering its assets in South-East Louisiana, including the newly acquired leases.
Saratoga's President, Andy C. Clifford, said, "We are pleased that our 3-D license with SEI is already yielding dividends by allowing us to identify favorable drilling prospects and that we were successful in acquiring these new leases as a direct result of the licensed 3-D dataset. We licensed the SEI Breton Sound 3-D dataset to better develop our existing Main Pass and Breton Sound assets as well as to explore for shallow Pliocene gas and deep shelf and ultra-deep gas objectives, close to our existing 'hub-and-spoke' infrastructure. We believe we will be able to quickly monetize these new assets due to their proximity to our facilities. Acquiring these new leases, that cover three separate low-risk oil prospects, are a direct result of having licensed this high quality dataset."
Mr. Clifford added, "Two of the prospects are expected to be qualified in the very near future by our independent reserve engineers as Proved Undeveloped (PUD) reserves and we are trying to drill one of them before year end. We plan to drill a twin well to a previously producing well that had cumulative production of 671 thousand barrels of oil (MBO), 841 million cubic feet of gas (MMCFG) and 36 thousand barrels of water (MBW). The well experienced mechanical problems during Hurricane Katrina requiring the well to be plugged and abandoned. The last test on the well prior to shut-in produced 661 barrels of oil per day (“BOPD”), 824 thousand cubic feet of gas per day (MCFGPD) and 381 barrels of water per day (BWPD) on a 16/64ths inch choke. Seismic mapping and reservoir analysis suggests there to be up to 700 MBO remaining in the prospect."
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