Trio Secures Option to Acquire Gas Prospect in Sacramento Basin

California-based Trio Petroleum Corp. has secured a four-month option with exclusivity to acquire a natural gas prospect in the Sacramento Basin, which has the potential to produce an estimated 40 billion cubic feet (Bcf) of gas.

Based on 3D seismic data, the prospect is close to prolific gas fields, has easy access to a gas pipeline with excess capacity, and targets gas sands at about 8,000 feet, Trio said in a news release Monday. During the option period, the company plans to finalize due diligence including on geophysical, legal, lease, title, pipeline, market, and permit matters. The prospect is fully leased and permitting for an exploration well is in an advanced stage, Trio noted.

Trio said it believes that the prospect could potentially provide significant natural gas production and cash flow, adding that it is an “excellent addition to the company’s growing portfolio of high-quality development and exploration opportunities”.

“We are pleased to have this Option to acquire a potentially significant gas prospect in the Sacramento Basin”, Trio CEO Michael L Peterson said. “We are fulfilling our business plan to make smart acquisitions to help ensure the success of the company and to increase shareholder value. We will continue to search for acquisitions to help diversify and provide significant upside opportunity to our production and cash flow”.

Acquisition Close for McCool Ranch Oil Field

Meanwhile, Trio also acquired an approximately 22 percent working interest in the McCool Ranch Oil Field, located in Monterey County seven miles north of the company’s flagship South Salinas Project. The seller and transaction value were not disclosed.

Trio’s acquisition is in the so-called Hangman Hollow Area which is relatively new and developed with four horizontal oil wells, two vertical oil wells, one water-disposal well, one freshwater well, a steam generator, boiler, three 5,000-barrel tanks, 250-barrel test tank, water softener facilities, two freshwater tanks, two soft water tanks, in-field steam pipelines, oil pipelines, and other facilities.

The property is fully and properly permitted for oil and gas production, cyclic-steam injection, and water disposal, Trio said in a separate news release. The company is investing to restart production from the field, which it expects to “establish important cash flow”, noting that the property has “significant upside potential with many undrilled infill and development well locations identified”.

The heavy-oil reservoir is the high-quality Lombardi oil sand at a depth of 2,100 feet. The Lombardi Sand at the acquired property is estimated to contain up to about seven million barrels of oil-in-place, according to the release.

The property produced oil until December 2015 when it was shut in, as were many other oil fields, due to the collapse in oil price to below $40 per barrel. Trio said it believes that current oil prices and other considerations make this an ideal time to restart the field.

Under full development, the acquired property will likely have about 15 horizontal wells. Trio expects to recover around 1.2 million stock tank barrels of oil using only cyclic steam stimulation. However, if it determines that a steam drive process is an appropriate development strategy, McCool Ranch may be capable of producing an additional 1.0 MMstb, according to the release.

 “We are pleased to close this acquisition at McCool Ranch”, Peterson said. “We are fulfilling our business plan to make smart acquisitions to help ensure the success of the company and to increase shareholder value. Our independent Special Acquisition Committee will continue to search for acquisitions to help diversify and provide significant upside opportunity to our production and cash flow. With each asset, we are dedicated to bring them onto production in a cost-efficient and timely manner”.

Trio is an oil and gas exploration and development company headquartered in Bakersfield, California, with operations in Monterey County, California. Trio has a large, approximately 9,267-acre asset called the South Salinas Project where it owns an 85.75 percent working interest.

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