Delta Oil & Gas Acquires Stake in Palmetto Point
Delta Oil and Gas has entered into a new 10-hole drilling program at Palmetto Point, Mississippi.
The prospect wells are located in the Frio Geological formation. It is expected the drilling program will commence before the end of March 2006 and the operator expects it will take 6 months or less to complete. Frio wells typically enjoy low finding costs and have a high degree of success. The gas targets occur at shallower depths, and have minimal completion costs.
Delta is currently assessing additional drilling prospects in Mississippi with the intent to develop a fifth core area for the Company. Currently Delta has an interest in three high impact oil and gas prospects in Alberta and one in California. Drilling has occurred on three of these four prospects.
The Drilling Program shall be conducted by Griffin & Griffin Exploration in its capacity as Operator. This will consist of the drilling, logging, testing, completing and equipping for production (or if applicable, the plugging and abandonment) of ten wells. Griffin anticipates drilling to a subsurface depth equal to such depth as is necessary to penetrate the sands of the Frio Formation identified as potentially productive of oil and/or gas. Griffin has drilled, owned or operated more than 100 Frio wells in the region.
Griffin has utilized seismic "bright spot" technology, a technology providing a tool to identify gas reservoirs and to delineate the reservoir geometry and limits. Utilizing these critical factors has improved reserve estimates and the geologic success ratio that has made the Frio an economical and predictable reservoir.
The Frio in the area of Southwest Mississippi and North-Central Louisiana is a very complex series of sand representing marine transgressions and regression and therefore the presence of varying depositional environments. Structurally, the Frio gas accumulations are a function of local structure and/or structural nose formed as a result of differential compaction features. However, stratigraphic termination (i.e. up dip shales outs of sands) also plays a role in most Frio accumulations. The stratigraphy is so complex that seismic HCL evaluations are the only viable exploratory tool for the Frio prospect.
Delta has acquired a 10% gross working interest in the drilling program.