Sefton Advances on US Field Development, Drilling Programs

Sefton Resources Inc, the AIM listed oil and gas production company with assets in California and Kansas, announces further advances in its planned development programs for its two wholly owned subsidiaries, TEG Oil and Gas USA, Inc (TEG USA) and TEG MidContinent (TEG). These follow on from the last update on December 7, 2008.

Since that date TEG USA has accomplished the following:

  • Completed a 3,700 bbl steam injection cycle in the Snow #5 well (Tapia field). The steam generator was fired utilizing lease gas from its own Yule #8 well. Oil production from the Snow #5 well significantly increased from 9.1 BOPD in November to an average of 63 BOPD during the first 25 days in January.
  • Completed the drilling of three more wells at its Tapia field during December 2008 and January 2009 (two Yule zone oil wells and one dedicated shallow gas well).
  • The new oil wells Yule #11 and Hartje #18 are already on production.  The gas well, Yule #9, was drilled and cased through the Yule oil zone for later completion and production of oil. It will first be perforated to utilize the lease gas for steaming operations
  • Received the preliminary maps for the follow-up geochemical field sampling over the Eureka Canyon prospect area.  The new maps enhance the prospect areas over a large portion of the Eastern Eureka Canyon lease acreage.
  • Received $50,000 on its Cell Tower Sale of Easement.  The balance of $325,000 is due on 1 April 2009.

TEG MidContinent has:

  • Drilled and cased its first pilot CBM well in its Anderson/Franklin Counties CBM Drilling Program.
  • Purchased  the  Petrol  Waverley  Project  assets  for  $100,000 (Anderson/Franklin counties).
  • Acquired  an  option  to  purchase  an  inactive  pipeline  in Jefferson/Leavenworth counties.

TEG USA Production

TEG USA sold a total of 4,110 bbl of oil during December.  This was slightly down on the previous month (4,269 bbl during November) as a result of taking three significant wells off-line during the steam injection and soak cycle period at Snow #5 and the clearing of the well pads at Yule #7 and #10 for the drilling of Yule #9 and #11.  All the wells have returned to production and all wells capable of oil production are now pumping.

Yule #11, drilled and completed to the Yule oil zone, started production on 19 January and has tested over 30 BOPD in each of its tests.  It is estimated that the well will settle to about 28 to 30 BOPD, which is similar to the adjacent Yule #7 and #10 wells and at the historic average for wells in the Tapia Oil Field.

Hartje #18, also drilled and completed to the Yule oil zone, commenced production on 28 January.  Production for the well will be reported as soon as it becomes available.  It is expected to produce at above average oil rates, based on its location, the thick pay zone, excellent oil shows while drilling and the interpretation of the wire line logs run in the well.

Both wells encountered oil at depths slightly greater than 1,000 feet below the surface, as predicted by pre-drilling mapping.

TEG MidContinent

The first well (Miller A2-1) of the pilot drilling program at Anderson Franklin County was drilled and logged during December.    Log analysis indicated eight feet of Riverton coal (at approximately 1,300 feet) and a presence of conventional sand that calculated wet from the logs but tested gas during the drilling. The well is located one mile west of the Lankard well that has 'neutron-density' cross-over on its logs (similar conventional sand -- indicative of possible gas productive zone).

TEG has three more locations permitted and ready to drill. Drilling could start as soon as the decision is made to continue after completing the Miller A2-1 or after tie-in with the newly acquired disposal system.

For $100,000, TEG has purchased all of Petrol's assets, including 17 wells and associated equipment, located in the Petrol Waverly Project.  The assets include a gas gathering and water disposal system, two Salt Water Disposal wells and 10 million cubic feet of gas per day processing facility.  The connection point for the gathering and disposal system is located three miles west of TEG's CBM pilot program.  By completing this acquisition TEG is assured access into a major purchase/interstate pipeline and now has available salt water disposal for its pilot program at greatly reduced costs, considering that the cost of a single saltwater disposal well is approximately $200,000.

TEG has also negotiated and executed a 'Letter of Intent' for the purchase from HDP, Inc.'s (Lubbock, Texas) inactive pipeline and gas gathering system, to include right-of-way.  TEG has deposited $15,000 (non-refundable) with HDP and has until March 20, 2009 to conduct 'due diligence'.  The 'Vanguard Pipeline' is located west and north of TEG's Leavenworth project.  The pipeline will provide a gathering system for TEG's future drilling and will establish a basis for potential joint ventures in exploration, gas gathering and transportation. The total purchase price is $115,000.

Chairman Jeremy Delmar-Morgan commented:

"The access that we now have into major pipelines will have a significant effect on planned development of our Kansas assets.  In addition, the drilling and steaming program at Tapia is now producing good results. We believe focusing on partially developed long-life assets that we control will ensure low lifting costs and carry us through the commodity price fluctuations that we are currently seeing."