News: Galilee Energy targets shallow oil in Kansas

Galilee Energy (ASX:GLL) has signed a memorandum of understanding with a group of private investors to earn up to a 75% working interest in low cost, high return shallow oil leases in the Anadarko Basin, Kansas.

Successful wells in this area are expected to deliver strong economic returns with dry hole costs of about US$300,000 per well and payout with less than 10,000 barrels of oil production.
   
The Anadarko Basin is a historic oil and gas province with discoveries dating back to the 1920s.

Galillee is targeting shallow (4,000 feet to 6,000 feet) limestones and sandstones in the Carboniferous section, primarily in the Missourian Lansing and Kansas City groups.

The reservoirs are generally from 5 to 40 feet thick and often have more than 20% porosity.

Secondary objectives exist in the slightly deeper Cherokee Group, Marmaton Group, Morrow Sandstone and Mississippi Lime.

Notably, exploration activity targeting these zones has increased significantly in Kansas during 2013/14.

The use of high-resolution 3D seismic data, which can resolve the small and subtle structural and stratigraphic anomalies as well as small faults, has resulted in an increase in exploration drilling success rates to over 65%.

Galilee can earn up to a 75% working interest in selected areas within 110,000 acres of leases in the Anadarko Basin.

It will fund the dry hole costs of the first 10 wells and completion costs of the first five wells within the AMI.

This allows it to select the location of operations across existing leases primarily in Meade County, Kansas and to jointly expand the asset within the encompassing 345,600 acre Area of Mutual Interest.

The AMI area is typical of the areas targeted by operators in other parts of Kansas.

It is only lightly explored yet surrounded by prolific historical oil and gas production.

Production to date from Meade County and the five adjacent counties is in excess of 185 million barrels of oil and 5.5 trillion cubic feet of gas, with producing fields located one mile to the east and within 10 miles to the south and west.