Obviously there is a question mark now over this purchase and we may not find out till Tues. But I have come across another oiler reactivating older wells "Resaca" with interesting results.
Read first - about Resaca - sorry but this will be a long post.
"Assets and Strategy
The Resaca properties are located in the Permian Basin of the United States, in West Texas and Southeast New Mexico. The Permian Basin, one of the largest and most prolific oil and natural gas producing basins in the United States, extends over 100,000 square miles of West Texas and Southeast New Mexico and has produced over 24 billion barrels of oil since its discovery in 1921. The area is characterized by oil and natural gas fields with long production histories and multiple producing formations. Resaca?s producing properties in the Permian Basin are mature fields with established decline curves. Resaca?s primary properties currently produce from the Yates, Seven Rivers, Queen, Grayburg, San Andres, Clearfork and Tansil formations and include 179 producing wells and, 58 injection wells. The majority of Resaca?s wells are shallow ? less than 4,000 feet deep - and produce from multiple producing horizons. As of June 30, 2010 Haas Petroleum Engineering Services valued Resaca?s 2P primary and secondary reserves at $292.3 million utilizing NYMEX commodity prices assumptions of $75.76 per barrel of oil and $4.10 per MMBTU of natural gas and discounting at 10%. In addition, Haas valued Resaca's possible primary and secondary reserves at $79.0 million utilizing the same assumptions.
Resaca?s exploitation plan, which was initiated in 2006, is to reactivate many of the shut-in wells, optimize and reactivate the existing waterflood programs and conduct a significant infill drilling program. The directors believe that the properties represent excellent opportunities for the development of low risk oil reserves. In addition to the company?s initial exploitation program, the directors believe the primary properties are excellent candidates for CO2 tertiary flooding. The use of CO2 for this type of enhanced recovery has revitalized many older proven oil producing fields in the Permian Basin. Several major companies are operating CO2 floods in the region and many of Resaca?s properties were identified in a US Department of Energy Study of CO2 flooding techniques as being amenable to CO2 enhanced oil recovery. To this end the company engaged Williamson Petroleum Consultants of Midland, Texas, to perform a feasibility study on some of it's properties for CO2 flooding. The study concluded that material amounts of incremental reserves could be accessed through CO2 flooding. Resaca plans to initiate a CO2 flood program for certain of the properties. If the program is successful, the directors believe that the CO2 flood could lead to additional recoveries of 7 to 16% of the original oil in place, based on the published Permian Basin oil recovery rate projections and the study performed by Williamson Petroleum Consultants. As of June 30, 2010, Williamson Petroleum Consultants valued Resaca's probable CO2 recovery reserves at $73.4 million and Resaca's possible CO2 recovery reserves at $7.3 million utilizing NYMEX commodity price assumptions of $75.76 per barrel of oil and $4.10 per MMBTU of natural gas and discounting at 10%."
Resaca announced an updated reserve study as of June 30, 2010 for the Company's oil and gas properties and to provide an update on the Company's operations in the Permian Basin. Reserves Update
As of 30 June 2010, Resaca's proved and probable (2P) reserves were 27.2 million barrels (MMbbls) of oil and 14.9 billion cubic feet (Bcf) of natural gas, for a total of 29.7 million barrels of oil equivalent (MMboe). The Company's proved reserves represented 48% of the 2P reserves. Additionally, Resaca's possible reserves were 5.5 MMbbls of oil and 3.5 Bcf of natural gas as of June 30, 2010 for total proved, probable and possible (3P) reserves of 32.7 MMbbls of oil and 18.4 Bcf of natural gas (35.8 MMboe). All reserves are calculated on a net revenue interest basis (working interest volumes, less royalties).
Resaca commissioned Haas to prepare a reserve report for its primary and secondary recovery (water injection) reserves and Williamson to prepare a reserve report considering only those additional reserves which could be recovered through tertiary recovery (CO2 injection). Together, these reports provide a complete analysis of Resaca's reserves."
