13 year oil and gas company that has over 30 producing wells and over 70 partners are looking to take on up to 15 new partners for this project located in the Permian Basin.
The proposed initial well will be drilled horizontally to achieve maximum penetration of the productive pay section. The Wolfcamp Limestone formation is ideal for the application of horizontal drilling with proven vertical pay thicknesses ranging from 500 to 600 feet (in the project acreage) and diagenetically controlled porosity zones (varying porosities and perme-ability throughout the section). Accessing the formation via a horizontal well bore converts 100 to 150 feet of vertical net pay to 4000 feet of horizontal pay zone, thus resulting in a significant increase in reserves of 4 to 5 times that of a conventional vertical well.
Following completion of the proposed well projected production is projected exceed 500 bbls of oil per day and give Interest Owners a three (3) to Four (4) month payout on the initial investment and a 10 to 1 return on total investment in the first 10 years of production.
Geology
The prospect is in the south-central eastern portion of the Permian Basin. The Permian Basin is one of the largest basins in North America and encompasses 86,000 square miles. The Permian Basin is skirted to the south by the Marathon-Ouachita structural belt, on the west by the Diablo Platform and Pedernal Uplift, on the north by the Matador Arch, and on the east by the Eastern Shelf of the Midland Basin and the western flank of the Bend Arch trend. The basin is about 250 by 300 miles in area and is separated into eastern and western halves by the north-south trending Central Basin Platform.
The majority of hydrocarbon production in the prospect area of the Permian Basin is from sandstone reservoirs from Pennsylvania Age and carbonate reservoirs from the Early to Mid-Permian Age rocks such as the Wolfcamp Limestone and Wolfcamp Reef formations. Oil production in this area is characterized by oil accumulations in combined structural-stratigraphic traps in Permian age platform-edge carbonate-buildup/Lime reservoirs. Reservoirs in platform-edge carbonate-buildups or Lime banks generally consist of porous packstone, wackstone, grainstone and carbonate debris flow material contained within massive limestone beds/buildups with diagenetically controlled porosity zones. Carbonate reservoirs of this type have porosities that range from 5 to 10 percent and permeabilities of 1mD to 5mD, with maximum relief ranging from 50 to 100 meters.
Well control in the prospect areas illustrates a Permian-Wolfcamp carbonate Lime buildup, with multiple structural highs bounded or isolated by faulting primarily on a north south axis, typical for a paleo margin environment in the transition zone from the eastern shelve dropping into the Basin. This provides evidence of a classic carbonate Lime feature with an up dip structural high within the pathway of the proposed wellbore with high relief (70 to 80 feet), and a stratigraphic trap (fault) to the west and structural closure via well control to the north and south. Traps of this type are in medium to high relief paleotopographic highs with combined structural/stratigraphic traps with diagenetically controlled porosity zones. Shale in the overall section, above and below, provides a seal to the productive interval. The estimated total productive area of the prospect acreage covers approximately 1000 to 1200 total acres.
Cumulative production from similar fields in the Permian Basin through 2015 was approximately 700 million barrels of oil from Permian-Wolfcamp producing horizons.
Texstar plans to drill the proposed well (Hoyt No. 2CH) across the primary Wolfcamp section, in Section 18, containing significant accumulations of oil and gas. The proposed well will be drilled to an approximate depth of 3900’ where the well bore will be kicked-off (start the curve to horizontal) to encounter the target section of the Wolfcamp Limestone formation (at 4400 to 4500 feet) on a horizontal tract to total depth/length (TD) of 8500 feet. Following drilling and testing, production casing will be set from the surface to the desired TD and the well completed for production via perforating, acidizing and multi-stage fracturing.The well is projected to have an initial 24-hour potential of 500 to 1000 bbls per day and produce flowing at a rate of 500 to 600 bbls of oil per day. Production sales of oil at a rate of 500 bbls per day will give Interest Owners an three (3) to four (4)month payout on the initial investment and a 10 to 1 return on total investment over the first 10 years of production.The primary goal of the prospect is to exploit a proven undeveloped reservoir capable of producing commercially viable quantities of oil and gas, thus creating cash flow of 25 to 30 million dollars in the first 10 years of production.
Ownership - Participation Terms
The lease hold estate conveyed to the working interest owners will be a 75% Net Revenue Interest (NRI), the “Working Interest” (WI) in the Wolfcamp formation on the prospect acreage. The Working Interest is the net interest conveyed less 25% royalty and/or overriding royalty interest. All participants (Unit Owners) in the prospect will be conveyed their proportionate share of the WI ownership via an assign-ment of interest in the well proration unit in the oil and gas leases currently held as the “Prospect Acreage” in Irion County, Texas.
Turn key cost for acreage acquisition, prospect development, drilling and completion of the initial horizontal well is $3,375,000.00, of which $2,204,500.00 for lease acquisition and drilling cost of the well, and $1,170,500.00 for completion and production facilities cost. Fifteen (15) Units of 1% Working Interest will be sold for $67,000.00 each, which includes the third for a quarter promotion.
Industry Overview
As the world economy continues to emerge from the pandemic, so will the demand for crude oil and natural gas. The U.S. government’s Energy Information Administration (EIA) predicts continued increases in worldwide demand for oil and states this as the primary reasons for price increases over the next 18 to 24 months. Other factors influencing this upward trend in crude oil prices include:
•Uncertain supply and pricing from foreign sources of oil (OPEC)
•Downturn in drilling and development of existing reserves
•Economic and Political unrest in many producing countries
•Increases in foreign demand for world oil supplies, including China and India
•Supply disruptions due natural events, such as Hurricanes
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