December 2011 Quarterly Report
Brisbane, Jan 31, 2012 AEST (ABN Newswire) - Texon Petroleum Limited (
ASX:TXN) is pleased to provide a quarterly report for the period ended 31 December 2011.
Production
Production for the quarter and year to date was:----------------------------------------------- Quarter Year to date 3 months 12 months ended ended 31 Dec 2011 31 Dec 2011-----------------------------------------------Gross:-----------------------------------------------Gas (mmcf) 408.5 1,409.1Oil (mbbl) 135.1 328.4Total (mboe(2)) 203.2 563.3-----------------------------------------------Nett (Texon share): (1)-----------------------------------------------Gas (mmcf) 184.2 610.6Oil (mbbl) 82.9 193.2Total (mboe(2)) 113.6 295.0-----------------------------------------------
Gross average daily production for the December quarter was 4,440 mcfgpd and 1,469 bopd (Texon's share(1): 2,003 mcfgpd and 901 bopd (1,235 boepd)) from 20 producing wells.
Gross average daily production for the current month through 27 January 2012 is about 1,879 boepd (1,163 bopd and 4,295 mcfgpd) and Texon's share(1) being: 1,008 boepd (713 bopd and 1,769 mcfgpd).
(1) Texon's beneficial NRI share (after Royalty)
(2) Gas is converted to boe on the basis that 6mcf of gas are equivalent to 1 boe.
Eagle Ford Project
The Company now has 7,214 Eagle Ford working interest acres under lease having recently expanded its position by acquiring an additional 480 acres. The Company's average working interest now is 93.2%.
The Company's Eagle Ford lease position has been significantly de-risked by the Company's four producing wells, and by the many offsetting wells by other operators. Texon has a sound lease position in the highly oil productive part of the Eagle Ford trend and is now considering how to realize the value of the Company's Eagle Ford holdings.
Leighton Olmos
Peeler #4, the twelfth Leighton well (all of which have been successful) finished drilling to a total vertical depth of 9,000 feet on 20 January. Production casing has been installed in the well in preparation for fracture stimulation in mid-February. The well will then be connected for oil and gas production. The Company's four nearby Olmos wells drilled in 2011 tested at initial rates of between 170 and 445 boepd.
The Leighton Olmos holding is now largely a development project and it is expected that there will be diminishing value uplift for future wells compared with the past. Consequently as announced in October 2011, the Company engaged Albrecht and Associates Inc, Houston based oil and gas divestment specialists to seek bidders to acquire the Leighton Olmos production and related leases. The proceeds will strengthen the Company's cash position.
The Company has an average of 63% WI in the Leighton Olmos project.
Mosman / Rockingham Olmos
The 3D seismic survey currently being acquired over the Mosman/Rockingham leases is due for completion in Q1 2012. The survey will enhance the mapping of Eagle Ford, Olmos, Wilcox and Pearsall prospects on the leases.
Wilcox
The Company's first Wilcox well (Hoskins #2 (Wilcox)) flowed at an initial rate of 55 bopd (370 API). The Company has a 95%WI in the well.
Together with the indicated pay in the Company's Hoskins EFS #1H and Teal EFS #1H wells, the results suggest that the Wilcox reservoirs could occur over possibly 1,500-2,000 acres in the Mosman-Rockingham leases.
Oil contracts
For the month of December 2011, the Company received about $5/bbl above WTI of $98.53 for its Eagle Ford oil. For the months January to March 2012 the Company will receive $1.65/bbl above Nymex WTI for its Eagle Ford oil.
New Texon / Wandoo agreement
As announced in November the Company amended its agreement with Wandoo Energy to extend the term for an additional five years to 2019 and increase the mapping area by over 100%. These amendments are subject to shareholder approval which is being sought at an EGM to be held early in March.
Through the agreement with Wandoo, the Company has first right of refusal on all prospects generated from Wandoo's database of 180 3D seismic surveys. To increase the output of prospects for Texon's review, Wandoo Energy has increased its staff to six mapping specialists.
Corporate
(a) CEO appointment
The Company announced the appointment of Mr Clifford S Foss Jr as CEO from 1 December 2011. Mr Foss brings extensive experience in the oil and gas industry in the Texas Gulf Coast area.
Mr Foss took over from Mr David Mason who retired on 30 November 2011 after being the founding CEO at the IPO in 2007 and who steered the Company to its present stage of development.
(b) Options
In December 2011 unlisted incentive options were issued to the following:
Newly appointed CEO Mr Cliff Foss was issued 7,000,000 options. The options were issued in two tranches of 1,000,000 (tranche one) and 6,000,000 (tranche two) for a term of five (5) years to expire 30 November 2016.
Company Secretary Mr Des Olling was issued 600,000 options for expiry on 31 December 2015.
The exercise price for both issues is A70 cents per option provided that the options will only be exercisable when the volume weighted average price of the Company's shares equals or exceeds 150% of the option exercise price (A$1.05) over 20 consecutive trading days.
During the quarter the Company also advised that 6,000,000 unlisted incentive options would be issued to the Chairman Dr John Armstrong and 600,000 unlisted incentive options would be issued to Director Mr Bernard Rowley. The options would be for a term of four years. Wandoo Energy will be issued with 5,000,000 unlisted incentive options for a term that coincides with the extension of the Prospect Generation Agreement ie 1 May 2019. All three issues have the same exercise price and hurdle restriction as with Messrs Foss and Olling and are subject to shareholder approval which is being sought at an Extraordinary General Meeting to be held in early March.
To view the complete Texon Petroleum Quarterly Report, please refer to the following link below:
http://media.abnnewswire.net/media/en/docs/ASX-TXN-239237.pdf
Contact
Cliff Foss
President & CEO
John Armstrong
Chairman
Texon Petroleum Limited
T: +617-3211-1122 (Australia)
T: +1-281-419-4976 (Houston)
http://www.texonpetroleum.com.au
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