Imperial Updates on Nunnelly Well Project
Imperial Resources has entered into an Oil and Gas lease agreement with the mineral owner of approximately 35 acres and an existing wellbore in Montague County Texas.
The Agreement provides for the development of the Project lease area and the existing well, known as Nunnelly #1, under these key terms;
- The mineral owners' retention of a 25% royalty interest in the acreage;
- Imperial's option, at its sole discretion (subject to further survey and decision as reported in the Company's press release of January 10, 2011) to pay the costs associated with the deepening and completion of the well, or alternatively, again at the Company's discretion, the drilling and completion of a new well.
Deepening of the existing Nunnelly #1 wellbore is the Company's first planned option. However, as previously reported, the Company may decide as works progress that the most cost effective course would be to drill a new well to access the Project's potential reserves.
Analogous wells in the near vicinity have produced cumulative totals generally in excess of 17,000 barrels of oil without the benefit of modern stimulation technology. Imperial believes that the potential cashflow from the Project, if commercially successful, will provide useful revenues as the Company progresses its planned transformational Oklahoma Resource Play and Salt Water Disposal Well opportunities.
Rob Durbin, CEO of Imperial, said, "The Nunnelly #1 offers Imperial a very low entry cost opportunity into a relatively low risk well that could, if successful, produce good revenues for the Company with no critical exposure whatsoever. It fits the 'nice upside at minimal cost' element of our model."