Black Dragon Snaps Up Stake in Humble Salt Dome Project

Black Dragon has acquired a 6.25% working interest in the Humble Salt Dome EOR Project located near Houston, TX. This project utilizes a patented EOR chemical via steam injection to bolster production after initial revenues begin to decrease. Surface operations have already commenced and the initial well should be drilled in the very near future, according to Black Dragon's President, Scott D. Smith.

The plan for the project is to drill a five well pattern, each of which are producers initially, and once production slows, a centrally located well will be converted to an injection well, optimizing recovery percentages for the remaining four wells. If this initial five well pattern is successful, two more patterns may possibly be drilled in this same manner. Black Dragon is working to acquire additional interest in this project as it can.

Mr. Smith went on to state that the recently drilled Paluxy well, in which Black Dragon acquired a small overriding royalty interest, has flushed in around 15 barrels per day. Also, Black Dragon has contracted a company to complete the two recently drilled gas wells on the 640 acre lease, via air drilling. These gas wells must be completed in this manner to minimize the risk of excess salt water disposal costs that can easily remove profitability from this type of well.

Black Dragon also is working to achieve a deal with its primary operator, Four Star Oil Company, so that Black Dragon can receive a larger percentage of its revenues that have been previously pledged for debt. This negotiation will free up operating capital to fund new exploration projects on Black Dragon's highest Net Revenue Interest leases, as well as to allocate funding toward rework operations on existing wells and leases that are not producing to their maximum ability, or in some cases at all. Mr. Smith hopes that this change will loosen the constraints on cash flow for the company so that he is able to continue to add acreage and interest to Black Dragon's portfolio, as well as to increase its production numbers.