Petro Resources PRC held their conference call this morning in the US. These are the comments made about the development of East Chalkey as an oil producer.
East Chalkley, Pine Pasture#2 is producing 700-1,000 bpd (with oil cut above 25%) of fluids on a test pump and awaits a engineered pump that should be available shortly. They plan to get limited production out of the well in the December quarter by trucking water production away from the well.
In the meantime they plan to drill another well down dip of the current #2 well before the end of this year. To dispose of water they are looking at a nearby abandoned well, but preferably they plan to drill two disposal wells into the current formation. PRC says they spent (to completion) about $1 million on the #2 well for their 35% interest, so I would asume that TEX spent around $714,000 for their 25%.
The planned #3 well will cost $2.2-2.4 million and the water disposal wells will cost $600,000 - $700,000. So TEX 25% will cost US$1,225,000 to complete development. So TEX total development costs on their 25% are around US$2,000,000. In return TEX should get production from two oil wells at about 75 bpd x 2 = 150 bpd. AT US$100 per barrel that is an annualized 54,750 barrels = US$5,475,000 (a payback of 4.4 months).
PRC says that the project is going better than they anticpated and they expect to recover at least 2 million barrels of oil over a number of years from the W2 sands. The W1 sands found higher in the #2 well represent an extension of an already worked gas zone and they only expect to (eventually) get small amounts of gas out of W1.
TEX is currently valued at A$8.5 million of which $5 million is cash AND they have three new wells being drilled in the four months with targets of 1- (25%) of 700,000 bo & 4BCF of gas 2- (10%) of 150,000 bo & 25.7 BCF 3- (15%) 10,500,000 bo & 204 BCF. Good luck to all longs.
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