Our current project is a 24-well drilling program in Southern California.  Several wells were drilled on the property in the 1970’s, with each well having initial production (IP) rates in the range of 150 to 220 barrels of oil per day (BOPD). However, because the formations are deep (12,000 – 15,000 feet) and over-pressured, and because wells of that era could not hold up to the high reservoir pressure, the wells eventually suffered mechanical failures and were shut in.

More recently, larger oil companies, have successfully completed wells in the same formations at comparable depths and pressures on the leases immediately adjacent to our lease.  Furthermore, they have successfully fracked these zones, obtaining IPs averaging 500 BOPD, and in a number of cases over 1,000 BOPD.

Substantial geological work has already been completed on this project, including a detailed geologic model based on the data from the seven old wells and a number of additional wells from the neighboring operators, as well as the available seismic data. Our geologist has designed a 24-well drilling program, with an estimated recovery of 450,000 barrels per well with a four-stage frack package.

We have obtained an independent reserve evaluation form a large and well respected petroleum engineering company located in Houston. The report categorizes the proved reserves at between 3.9 and 4.8 million barrels of oil (MMBO). This is based on drilling 13-16 new wells. Total reserves of all categories are 8 to 10 MMBO. The net present value (discounted at 10% p.a.) is $6.0 million per well for the proved case (i.e., no fracking) and $11.0 million per well for the base case (i.e, with a four-stage frack).