re: anncmt: commerical oil and gas flows
lotta potential IMHO. not to mention lot of activity this year.
COMMERCIAL OIL & GAS FLOWS FROM CHEROKEE BASIN CBM PROJECT HIGHLIGHTS �� CBM (Coal Bed Methane) drilling approvals are well advanced, with the first four (4) well program set to be completed in the June Quarter 2006. �� First three (3) well re-completion program is now finished, with a further twelve (12) existing wells still to be assessed. �� Initial project flow rates of approximately 300 MCFGPD and 20 BOPD, with oil and gas sales to be reported in the June Quarter 2006. �� Project revenue estimated to be approximately $1.4 million per annum (based on just these initial flow rates). �� Current cash reserves of approximately $5.8 million. PROJECT UPDATE The Directors of Redfork Energy Limited (ASX:RFE) are pleased to announce the successful completion of the first three (3) well re-completion program. This program was designed to access “behind pipe” oil and gas within existing wells on the Company’s held-by-production (HBP) leases. The program focused on the Bass 90-1, Osage 86-1 and Church 88-1 wells, with the successful completion of discrete zones within each of these wells. Discrete zones within each of these wells were selected for re-completion, which involved re-entering the hole perforation of the casing and (as required) the acidization and fraccing of each zone. Each of the wells was then brought on-line, with initial flow rates of 60MCFGPD for the Bass 90-1, 65MCFGPD for the Osage 86-1 and 16MCFGPD for the Church 86-1, established. Production infrastructure is in place and the Company has commenced selling gas through the Scissortail Energy sales line. Revenue from initial oil and gas sales will be reported in the June quarter. ASX 10052006 On April 19, 2006, the Company announced the acquisition of a further 22.5% Working Interest in its 4,200 acre holding in the project. This transaction will result in the Company increasing its Working Interest in the project to 100% (80% Net Revenue Interest). In addition, Redfork will acquire the right to operate the project and will take control and ownership of the project infrastructure, including gas gathering system, tank battery, pipelines, laterals, connections, meters, taps and related equipment. The Company’s share of current project revenue (based on 80% NRI) amounts to approximately A$1.4 million per annum. The Company will continue with this program of re-completions with a further twelve (12) wells available for treatment. The next three (3) well re-completion program is currently being planned and will commence during the June Quarter. Successful completion of discrete zones within each of these wells (which are known to produce oil and gas) is expected to result in a substantial increase in production from the current levels. EXPLORATION The Company is focused on building significant CBM gas-in-place reserves and is well placed to fast-track its CBM drilling program. As previously announced, the Company plans to drill approximately fifteen (15) CBM wells in 2006, with the first four (4) well sub-program to be completed in the June 2006 quarter. A total of eight (8) drilling permits have been prepared and filed with the Bureau of Indian Affairs and the Osage Nation Agency. A further seven (7) permits are currently being prepared and are expected to be lodged with the authorities in the next two weeks, providing the Company with a total of fifteen (15) permitted drilling locations within its 4,200 acre holding in Osage County, Oklahoma. The first of these permits is expected to be approved within the next two weeks. CHEROKEE BASIN CBM PLAY The Company’s 4,200 acre holding in Osage County, Oklahoma is located approximately eight (8) kilometers north west of the city of Tulsa. Osage County is located in the north-eastern corner of Oklahoma within the Cherokee Basin. The County currently has over 13,000 active producing oil and gas wells. Current oil production is in excess of 11,000 BOPD, and gas production is over 15,000 MCFGPD. The project is located adjacent to three of the regions most successful CBM players (Amvest Osage Inc, Newfield Exploration and Admiral Bay Resources) (see attached diagram). Amvest Osage, established operations in the area in 2001 and is currently producing 12.4 MMCFGPD from its Osage leases. Reserves are currently estimated at 2.1 TCF of CBM gas in place. Amvest have demonstrated that it is possible to achieve multiple completions in this basin and are completing up to three (3) coals seams per well. In addition they are currently drilling horizontal CBM wells, to access significant additional reserves. Toronto Stock Exchange listed Admiral Bay Resources’ Swordfish project (located to the north west) hosts independently estimated possible reserves of 2.7BCF per 1,000 acres (or US$8.1M per 1,000 acres at current prices). Admiral Bay holds approximately 34,000 Acres, with 425 potential drilling locations. The Company has drilled in excess of 50 CBM wells, and is targeting gas production per well of 70 MCFGPD. ASX 10052006 2 Newfield Exploration’s Cherokee Basin CBM project is located north east of (and adjacent to) the Company’s project. Newfield is currently the most active CBM operator in the region, holding 85,000 acres with production of 16 MMCFGD and with plans to drill in excess of 160 wells in 2006. OVERVIEW The Company has a very clear and simple goal. To build significant CBM gas-in-place reserves on its leases. To this end the Company will have, subject to the completion of the transaction to acquire its additional interest: �� 100% ownership (80% Net Revenue Interest) of Oil, Gas and CBM leases covering 4,200 acres in Osage County Oklahoma. �� Cash flow from its fifteen (15) existing wells. �� 56 million fully paid ordinary shares and 17.5 million 20 cent options (expiring 30 April 2009) on issue. Yours faithfully,
RFE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
