March 2015 Quarterly Cashflow and Activities Report
Brisbane, April 30, 2015 AEST (ABN Newswire) - Pryme Energy Limited (
ASX:PYM) (POGLY:OTCMKTS) announce the March 2015 Quarterly Cashflow and Activities Report with significant highlights.
Financial
Average net daily sales to Pryme's account for the March quarter were 80 Bbls/day of oil and 18 Mcf/day of natural gas. The increase in net production over the previous quarter is attributable to the Capitola Oil Project.
Revenues will increase further during the June quarter based on current oil and natural gas production rates from Capitola as outlined below. Pryme's remaining legacy project, Four Rivers, has remained relatively stable through the first quarter. Cash on hand at 31 March 2015 was $6.1 million with quarterly capital costs of $2.1M invested in the Capitola project. We estimate a further US$1.1M will be spent in Capitola over the coming quarter including the fracture stimulation and completion of the Shari Lynn well. Cash receipts from oil and gas sales for the quarter totalled $0.3 million. Revenue for the quarter totalled $0.3 million. Cash receipts may differ to reported revenue due to cash receipts from sales being disbursed net of royalties and the timing of working interest holder distributions by the operator.
Projects
Capitola Oil Project
By the end of the quarter Pryme was producing from the first three Capitola wells and had drilled the fourth well, the Shari Lynn No.1. The short term plans are to optimise production from producing wells, to complete the Shari Lynn and bring it into production, and to drill and complete the fifth well, the Fox 7-L4.
The previous 30 day average production from Capitola is 130 barrels of oil (98 barrels of oil net to Pryme) and 195Mcf of natural gas (146Mcf of natural gas net to Pryme) from the first three wells. Production is expected to increase through the second quarter after the Shari Lynn is brought online and continuous production is established from the Hope Boles well.
Concurrently with the development of the fourth and fifth Capitola wells an evaluation of project reserves will be undertaken. The reserve report will classify reserves from 1P, 2P through to 3P and provide further evidence of the value of the Capitola Oil Project. The results of the study are expected to be included in Pryme's June 2015 Half Year Report.
Following is a summary of the status of each well currently being operated by Pryme in the Capitola Oil Project. Mahaffey Bishop PU1 (100% WI / 75% NRI before payout (75% WI and 56.25% NRI after payout))
The Mahaffey Bishop PU1 well in the Sweetwater acreage block was drilled to 6,090 feet (1,856 metres) and intersected 34 net feet (10 net metres) of oil and gas saturated sandstone within the Canyon Sand interval as well as encountering additional hydrocarbon shows in the Cline Shale and other intervals.
The well continues to exceed expectations with production peaking at over 100 barrels of oil per day and fairly steady production being established at around 90 barrels of oil per day (68 barrels of oil per day net to Pryme) with little or no decline in its production profile. The well is producing from multiple Canyon Sand intervals. The Cline Shale formation has been isolated due to excessive water production.
Hope Boles PU1 (100% WI / 75% NRI before payout (75% WI and 56.25% NRI after payout))
The Hope Boles PU 1, the second well to be drilled in the Sweetwater acreage block, was drilled to a depth of 6,050 feet (1,844 metres). Mud log and electric log data indicate that the primary objective, the multiple sand packages within the Canyon Sand formation, contains 94 gross and 36 net feet (11 net metres) of oil and gas saturated sandstone.
The Hope Boles' performance to date has been intermittent with oil production fluctuating at around 10-20 barrels of oil per day (8-15 barrels per day net to Pryme). Actions to improve the performance of the well have included drilling out the plug which isolated the Cline Shale from the Canyon Sands formation and allowing oil and gas from both zones to be produced to surface.
McCain 189-F1 (100% WI / 75% NRI before payout (75% WI and 56.25% NRI after payout))
The McCain 189-F1, is located in the Claytonville acreage block and was drilled to a depth of 7,300 feet (2,225 metres). Mud log and electric log data identified several intervals of oil and gas saturated rock aggregating approximately 170 net feet (51 net metres) in the Canyon Sand, Palo Pinto and Cline Shale. Other intervals with hydrocarbon shows were encountered in the Ellenburger formation which was also targets for this well.
The well is currently producing at an average rate of 36 barrels of oil per day (27 barrels net to Pryme) as well as 195 Mcf per day of natural gas (146Mcf per day net to Pryme) and associated liquids.
Natural gas sales commenced during the quarter. The value of the natural gas product is enhanced by its high liquids content which has elevated its energy content to approximately 1,700Btu/scf and delivers a substantial premium above benchmark natural gas prices which are based on an energy content of 1,100 Btu/scf.
Shari Lynn No.1 (100% WI / 75% NRI)
The Shari Lynn No.1 well, located in the Sweetwater acreage block of the Capitola Oil Project, was drilled to a depth of 5,621 feet (1,713 metres) in February.
Mud log data identified several intervals with oil and gas shows within the Breckenridge Lime and Canyon Sand intervals.
The well is relatively close to the Mahaffey Bishop well and, when connected to pump and cleaned up, is expected to have similar production characteristics.
The Shari Lynn was fracture stimulated and completed in the Canyon Sand at the end of April. A rod beam pump has been installed and the well is currently producing back frack fluids.
Fox 7-L4 (100% WI / 75% NRI)
The Fox 7-L4 well will be drilled within the Sweetwater acreage block of the Capitola Oil Project and will target the Canyon Sand formation. Drilling will commence once the Shari Lynn is brought into production and oil and natural gas sales have commenced.
About the Capitola Oil Project
The Capitola Oil Project is located along the Eastern Shelf of the Permian Basin just north of the town of Sweetwater, Texas. The project contains a number of shallow, "stacked" formations to depths of 6,000 feet with established production history from vertical wells. These overlie the Cline Shale formation which is the subject of an emerging resource play of national significance. Pryme's value creation strategy is to develop the shallower, well-defined targets using advanced drilling, completion and stimulation technology, and to exploit horizontal development of formations where feasible.
The Capitola Oil Project acreage is contained within two blocks of contiguous leases referred to as Sweetwater (approx. 7,000 acres) and Claytonville (approx. 2,333 acres) to the north of Sweetwater. Pryme is the operator of the Capitola Oil Project.
There are three primary targets in Capitola along with numerous secondary targets. The primary targets, which persist throughout our acreage, are the Breckenridge Lime at 4,500 feet deep, the Canyon Sand series at approximately 5,200 feet in depth and the Cline Shale at 6,000 feet deep. Pryme proposes to earn a 45% working interest in 9,333 acres (4,200 net acres) in all mineral rights from the surface through to the top of the Cline Shale (Shallow Rights) and a 30% working interest (2,800 net acres) in all other rights including the Cline Shale (Deep Rights)
Four Rivers Project (8% - 25% WI)
The March 2015 quarter oil sales of 1,769 barrels (19 Bbls/day net to Pryme) were marginally lower than the previous quarter. This is mainly attributable to natural decline in production. Pryme has an interest in 1,260 acres (240 acres net to Pryme) located in LaSalle and Catahoula Parishes in Louisiana and Jefferson and Wilkinson Counties in Mississippi.
Oil and Gas Tenements
Earned Acreage in Capitola and Additional Drilling
In accordance with the terms of the Capitola Oil Project Farmout Agreement (Farmout Agreement), on drilling the first five wells in the project Pryme will have earned a 45% working interest (WI) (4,200 net acres) in the Shallow Rights and a 30% WI (2,800 net acres) in the Deep Rights. The drilling of each subsequent well is governed by the Joint Operating Agreement (JOA) whereby Pryme's minimum 45% working interest in the Shallow Rights and 30% WI in the Deep Rights is preserved and may increase depending on the funding elections of the other project participants.
In accordance with the terms of the Farmout Agreement, Pryme funded 100% of the costs of the first four Capitola wells and currently has a 100% WI in each of these wells. Pryme's interest in the first three wells will reduce to a 75% WI after the net revenue from all three wells has repaid the development cost (payout).
Pryme's working interest in the fourth and fifth wells is preserved at a 100% working interest.
To view the quarterly report, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-PYM-855357.pdf
About Indago Energy Ltd
Indago Energy Ltd (ASX:INK) (OTCMKTS:POGLY) is an Australian listed company engaged in oil and gas exploration, development and production. Indago's project portfolio includes liquid rich producing assets together with substantial oil development and exploration acreage in the United States.
The Company's Exploration and Production focus is on high growth oil and gas projects offering scalability of production, cash flows and reserves. Indago currently has several producing projects together with a significant acreage position. The Company's immediate focus is the development of its Capitola Oil Project located in an active region of the Cline Shale resource play along the Eastern Shelf of the Permian Basin, Texas. The project's core development and exploitation opportunities are shallower multiple "stacked" sandstones and limestones to depths of 7,000 feet which are effectively produced from vertically drilled wells. Indago's value driven model is executed through exploiting shallower, well defined intervals with advanced completion and stimulation technology within known produced oil fields together with exposure to the emerging Cline Shale resource play.
Indago's shares are publicly traded on the Australian Securities Exchange (ASX ticker: INK) and also as American Depositary Receipts on the OTCQX (ADR ticker: POGLY).
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