PROSPECT: Steamboat:Jim Hogg County No pipe Queen City 4 MMBO 50 BCF

 

     PROPOSED TOTAL DEPTH: 8200 feet Queen City or 12,900 feet Wilcox Hinnant

     PRIMARY OBJECTIVE: Queen City Sands, “no pipe”, and Wilcox Hinnant  

     POTENTIAL RESERVES: 4 MMBO + 50 BCF QUEEN CITY

     (192,000 BO/well for Queen City-2,000 acres);

     50-10 BCF WILCOX (5-10 BCF/well-900-1200 acres)

     EXPECTED INITIAL FLOW RATE: Queen City 100-200 BOPD & 2-3 MMCFD  and

     Wilcox 10 MMCFD with frac.

     DHC ESTIMATED: $ 741,000 QC (no pipe) and $4,000,000 Wilcox

     COMPLETION: $660,000 QC and 1 MM Wilcox.

     ACRES UNDER CLOSURE:  Approximately 2,000+ acres Queen City;

     900-1200 acres Wilcox.

     AVERAGE NET REVENUE INTEREST and BURDENS (8/8): NRI shall be 100% of

     leased interest less the Mineral Owners’ royalty and the Teal Group’s 3%. Most likely 72%

     (if mineral owners royalty is 75%).

     TERMS: Pay lease, legal and brokerage costs; pay a prospect fee of $50,000 to Teal Energy; 

     and pay about $100,000 with field tapes for 73 for miles of seismic (license goes to Operator).

     Carry Teal 5% to the tanks on the first well, and Teal has a 5% BIAPO on the second well.

     Teal has a well by well option to join for a 5% ground floor working interest.

     WORKING INTEREST AVAILABLE:  50-100%.

 

 

GEOLOGY AND GEOPHYSICS:

The Steamboat prospect is a seismically defined crest ally faulted rollover structure lying east of the main Wilcox flexure.  It is comprised a Queen City and a Wilcox Hinnant and Cook Mountain objectives which should be tested with separate wells. An antithetic fault forms a trap for a Wilcox gas accumulation discovered and tested in the mid-1980’s. This well tested 3.5 MMCFD without fracture stimulation from a Wilcox Hinnant sand below 12,000 feet. Seismic interpretation indicates the trapping fault for the Wilcox gas accumulation migrates east of the  Wilcox location and should form a similar antithetic trap in a section of well-developed Queen City and Cook Mountain sands.  There is greater than 60 feet of  sand with  >15% porosity in the off-structure Sante-Fe Helen No 1 giving upside of three BCF and 100,000-300,000 BO/ crestal wells. The Wilcox Hinnant sands have a blocky log character and may be a turbidite feeder channel facies, similar the prolific Travis Ward Field sands.

Additional 2-D or a 3-D seismic survey should be acquired over an area covering approximately 20-30 square miles to adequately image the deep structure before drilling new Wilcox tests (The existing Western shoot could be extended by about 15 squares as an alternative). Two million is a good estimate for the cost of a 3-D survey.

Subject to prior sale.