Texon Petroleum Limited (ASX:TXN) Capital Raising Successfully Completed And First Horizontal Eagle Ford Well Drilling Expected In August 2010
Texon Petroleum Limited (ASX:TXN) Capital Raising Successfully Completed And First Horizontal Eagle Ford Well Drilling Expected In August 2010

Brisbane, June 29, 2010 AEST (ABN Newswire) - Texon Petroleum Limited (googlechartASX:TXN) announces that it has successfully completed a placement of 40.6 million shares to sophisticated and institutional investors at an issue price of A$0.35 per share to raise approximately A$14.2million. The price represents a discount of 12.3% to the 5 day average price of the Company's shares traded prior to the Company requesting a trading halt.

The placement which received strong support from investors was managed by RBS Morgans Corporate Limited and Patersons Securities Limited with RBS Morgans as joint Lead Managers.

The new shares will be issued in two tranches: 17.86 million shares in accordance with the 15% Listing Rule 7.1 which does not require immediate shareholder approval and 22.74 million shares which will be issued subject to shareholder approval at an upcoming extraordinary general meeting to be held in August.

The funds are earmarked for three horizontal Eagle Ford wells on the Company's Leighton leases where the presence of the Eagle Ford has been established via the Company's vertical wells, Tyler Ranch #4 and Peeler Placid #1.

The first of these horizontal Eagle Ford wells is expected to begin drilling in August this year. It will be located beside the Tyler Ranch #4 vertical well where 142ft of Eagle Ford was encountered in October last year with good oil and gas shows. Overall, the Eagle Ford in the Company's three (3) vertical wells drilled so far is well developed (137-143ft thick) with good porosity, permeability, limestone/silica, and hydrocarbon saturation characteristics.

The first Eagle Ford horizontal well in Leighton is expected to take 30 days to drill with fracture stimulation and testing expected in the following 30-60 days.

Texon has engaged Total Energy Services ("TES") to manage the drilling programme. TES has extensive experience drilling horizontal Eagle Ford wells with other horizontal Eagle Ford companies, including Petrohawk and Swift.

The design of the fracture stimulation programme will be contracted to Pinnacle, a subsidiary of Halliburton. Pinnacle has extensive experience in fracture stimulation design of Eagle Ford wells.

Oil and gas production from a successful Leighton horizontal Eagle Ford well will be marketed together with the oil and gas currently being produced from Texon's six (6) wells already producing from the Olmos reservoir at Leighton.

Texon has a 70% Working Interest ("WI") in this first horizontal well with a 75% Net Revenue Interest ("NRI"). Texon's 70% WI share of the cost of a trouble-free horizontal Eagle Ford well is forecast to be US$4.2M (ca.A$4.8M).

Overall potential to Texon's current WI's of the Eagle Ford in the Company's Leighton, Mosman, Rockingham and Sutton leases, is 37mmboe including possibly 31mmbbls of oil. The nearest successful Eagle Ford well to these leases is Swift's PCQ 1H well which is 3km south of Rockingham and flowed 1,134 bopd and 1.1 mmcfgpd.

A successful first Eagle Ford well will likely be followed by second and third horizontal Eagle Ford wells in the last quarter of this year and the first quarter of 2011 respectively.

Oil and gas futures prices (Source: NYMEX August 2010)

- Oil: US$ 78.6/bbl (approx.)
- Gas: US$ 4.84/mmbtu (approx. US$5.50/mcf for all Texon gas - including US$6.80/mcf for Leighton Olmos gas)

Contact

Dr. John Armstrong
Chairman
Brisbane: TEL: +61-7-3211-1122
Or
Mr. David Mason
Chief Executive Officer
Brisbane: TEL: +61-7-3211-1122

Houston: TEL: +1-281-419-4976
(Houston is 15 hours behind Aust.
Eastern Standard time)



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