True North Announces Three-Well Drilling Program
True North Energy Corp., a junior oil and gas exploration company, has entered into a three-well participation agreements with Bayou City Exploration. Bayou City is acting as an operator on all of the wells.
The program consists of drilling one well on the Windfall Prospect to test the Hockley and Cole sands and a re-entry of an Arco McLean No. 1 Well on the Frost National Bank Prospect, to test the Wilcox sands. Both prospects are located in Live Oak County, Texas. The third project, the Zodiac II Prospect, will be drilled to test the Siph D Formation in Jeff Davis and Calcasieu parishes in Louisiana.
Bayou City estimates potential productivity from the re-entry of the Arco McLean No. 1 Well at 2 mmscfd (250 mcfd net to the company after payout). The Wilcox trend sands in the area have documented productive wells dating back to 1960. The play was recently rejuvenated by significant field discoveries along the trend, with some wells reporting initial rates of 7 MMCFD.
The re-entry operation commenced on the Frost National Bank Prospect on June 8.
By participating in the Live Oak County prospects, True North will earn a 16.67% working interest in the prospects before payout and a 12.5% working interest after payout. In the Zodiac II Prospect, True North will earn a 25% working interest when the test well has reached the target depth. The company will pay 33.33% of well drilling costs and 25% of all well completion costs. It will also pay its proportionate share of prospect costs including geological and geophysical costs, third-party prospect fees, land brokerage costs, lease bonus, and all other costs associated with the respective prospects.
Under the respective agreements, True North has an option--but not the obligation--to participate in the drilling of any subsequent wells within the prospects area by paying its proportionate share of the costs.
True North has an option to participate in a fourth prospect, a new well to be drilled in Live Oak County, targeting the deep Wilcox formation. At this time, the prospect is still under development and will require additional seismic to define a drilling location. The company anticipates making a decision on drilling this prospect within next twelve months.
The opportunity to participate in this program represents True North's continued efforts to add cash flow and proven reserves while at the same time diversifying its portfolio risk profile.
"The Wilcox Trend prospect is a very attractive, near-term opportunity," said John Folnovic, True North's president and CEO. "If successful, the project will deliver quick cash flow and proven reserves to the company and contribute to the funding of the recently undertaken evaluation of our core assets in Alaska. We are also very pleased to be working with an experienced operator such as Bayou City."
True North Energy Corp. is a publicly traded, independent oil and gas exploration company, with headquarters in Houston, Texas. It is focused on development of the company's core asset in Alaska. The company is strategically located in the Cook Inlet and Beaufort Sea areas of Alaska and has commenced technical evaluation of its 34,850 acres of petroleum land holdings.
Bayou City Exploration, Inc. is an oil and gas exploration firm focused in proven geologic trends in East Texas and the Gulf Coast of Texas and Louisiana. Based in Houston, the company leverages its management team's experience and multidisciplinary expertise in applying advanced 3-D seismic analysis, 3-D processing algorithms, amplitude attribute, and imaging technologies to reduce the drilling risks by identifying the presence of economic hydrocarbons. The company's database has more than 7,200 square miles of 3-D data, most of it covering Bayou City's focus area, as well as 13,000 miles of 2-D data.
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