Précédente
ST 127 #1 – Bol Mex Recompletion Opportunity
Matagorda Bay, Calhoun County, TX

PROSPECT DESCRIPTION
The owners of the 4 new (320 ac) leases in Matagorda Bay (see Bol Mex structure map), are seeking to sell a 25% WI position to an experienced operator. The best opportunity in the acreage lies with recompleting the existing ST 127 #1 well to the Bol Mex. The ST 127 #1 was drilled in 2008 under the previous, expired lease, and is T.A.’d after 2 non-commercial tests in the Nod Blan. The Bol Mex sand, with the best potential in the well, was never tested because STO, the previous contract operator, filed for bankruptcy in 2009 and allowed the lease to expire prior to a planned test which was AFE’d and approved by all partners.

This geo-pressured Bol Mex reservoir (16.8 ppg @ 8600’ TVD) has exciting potential, with reserves estimated from 1.2 to 4.2 MMBO using a recovery factor of 300 bbl/ac-ft.

The aerial extent of the Bol Mex, based on 3D-seismic and well control, is estimated at 286 – 738 ac. The estimated net pay in the ST 127 #1 is 34’. The low resistivity pay is predicted to be hydrocarbon-bearing by Jimmie Babbitt, a Gulf Coast log analyst. The sidewall cores indicate permeable oil-bearing sand with 39-41 °API gravity and with several porosity measurements between 25 - 28%. SEM analysis on 3 SWC’s described the samples as “highly porous and permeable”. The mud log was also very impressive in the Bol Mex interval. While the ST 127 #1 penetration in the Bol Mex is upthrown of a major south-southwest to north-northeast fault, there have been 2 Bol Mex producers downthrown of this fault with similar low resistivity pays.

There is further potential in 6 shallower, thinner, Frio pays that are called probable hydrocarbon by Jimmie Babbitt, with oil and gas SWC’s.

WELL AND LEASE INFORMATION

Lease Info: April 2010 Texas lease sale, $408,000
Water Depth: 12’
Seismic: Arbol has license to 3D seismic owned by SEI
Well Depth: Bol Mex = 9076-9260’ (MD), 8560-8710’ (TVD), 38° hole angle in the ST 127 #1

8/8 Estimated Costs:
$500,000 – recomplete and test
$300,000 – abandonment cost if necessary
$600,000 – facilities/pipeline tie-in (existing 7 mi, 6” pipeline to shore)

8/8 Est Reserves:
1.2 MMBO + 1.7 BCF (minimum case, uses LKO in ST 127 #1)
2.3 MMBO + 3.2 BCF (most likely case)
4.2 MMBO + 5.9 BCF (maximum case, uses HKO in ST 154 #1)

TERMS
The asking price based on 100% WI is $3,908,000, plus prorate JOA costs after 6-1-10. This cost includes actual acreage costs of $408,000, plus $3,500,000 for partial recovery of sunk costs (which total $13MM). All costs going forward would be on a “heads-up” basis, including all JOA costs after 6-1-10, the workover, hookup, future wells, and P&A. NRI delivered is 75% if completed before March 2012.

CAPEX Summary, 100% WI
Up front costs: $3,908,000 (plus prorate JOA costs after 6-1-10)
Workover $ 500,000
Hookup: $ 600,000
Total: $5,008,000

CAPEX Summary, 25% WI
Up front costs: $ 977,000 (plus prorate JOA costs after 6-1-10)
Workover $ 125,000
Hookup: $ 150,000
Total: $ 1,252,000


CURRENT OWNERS
Arbol Resources, Inc. (current RRC operator with P-4), Plexus Investments USA, Inc., LAR Oil Company, Inc., Orr Exploration Ltd, WWH Energy, LLC, Rainier Exploration, LLC, Terry Hogwood, JHN Family Investments, LLC, and Hardrock Partners, Ltd.

DEAL STATUS
25% WI with operations is available but is subject to prior sale.

CONTACTS
Bill Holden 713-591-8639
Joe Watson 713-253-6066
Allen Lazenby 713-725-3486