March Quarterly Reports
Perth, April 30, 2012 AEST (ABN Newswire) - Texon Petroleum Ltd (
ASX:TXN) is pleased to provide its Quarterly Activity Report for the quarter ended 31 March 2012.
Production
Production for the quarter was:-------------------------------------- Quarter 3 months ended 31 Mar 2012--------------------------------------Gross:Gas (mmcf) 216.5Oil (mbbl) 71.0Total (mboe(2)) 107.1--------------------------------------Nett (Texon share): (1)--------------------------------------Gas (mmcf) 111.1Oil (mbbl) 45.2Total (mboe(2)) 63.7--------------------------------------
Gross average daily production for the March quarter was 2,379 mcfgpd and 780 bopd (Texon's share(1): 1,221 mcfgpd and 497 bopd (700 boepd)) from 21 producing wells.
The Company's Leighton Olmos and Yegua production from 15 producing wells was sold effective 1 February 2012.
Gross average daily production for the current month through 24 April 2012 is about 593 boepd (516 bopd and 461 mcfgpd) and Texon's share(1) being: 370 boepd (342 bopd and 273 mcfgpd).
Reserves (*)
Total 3P reserves of 12.88 mmboe for year end 2011 attributable to the Company's NRI is a 90% increase over year end 2010. Eagle Ford reserves provided the majority of the reserves with 11.33 mmboe which was 125% increase on the previous year.
Eagle Ford Project
The Company has 7,196 Eagle Ford working interest acres under lease (93.3% WI in 7,712 acres).
The 2012 Eagle Ford drilling program is scheduled to commence with the Company's fifth Eagle Ford well, the Peeler #1H, a lease commitment well due to commence drilling early May. Texon will have a 82.2% WI (61.6% NRI) in the well, which is located immediately adjacent to the Company's third Eagle Ford well (Tyler Ranch #2H), our most prolific producing well.
In February this year the Company announced that it had appointed Houston based Albrecht and Associates and Brisbane based RBS Morgans to seek potential buyers for all or part of the Company's Eagle Ford project. The Company believes that its four Eagle Ford wells have largely de-risked its Eagle Ford leases and that a sale will provide the opportunity for shareholders to benefit from the value of these holdings. Target completion date for a sale is mid June but completion will obviously depend on the Company receiving a satisfactory bid.
Leighton Olmos
The Company closed a purchase and sale agreement with a USA based company on 6 March 2012 whereby Texon sold its holdings in the Leighton area Olmos reservoir, effective 1 February 2012. The net proceeds from the sale amounted to approximately US$12.4 million before tax.
Mosman / Rockingham Olmos
Review of newly acquired 3D seismic over the Mosman/Rockingham leases indicates an area of 1,560 acres where the 3D response to the Olmos is similar to the 3D Olmos character at Leighton, suggesting a potential for 30 Olmos wells on 40 acre spacing. This is similar to the number of Olmos well locations at Leighton.
The Company will begin drilling the first 2012 Mosman-Rockingham Olmos well in the June quarter, targeting the Olmos at 9,000 feet. Average production from nearby Olmos wells in the AWP field to the east is 130,000 boe per well, and revenue would be 90% linked to the oil price. Texon will have a 95% WI in the well. On this basis, there is potentially a resource of about 3 mmboe to Texon's WI which represents a valuable new low risk initiative for the Company. If the well is successful production could begin in July this year.
Wilcox
The Company's first Wilcox well (Hoskins #2 (Wilcox)) flowed at an initial rate of 55 bopd in January 2012 and is now on pump. The Wilcox reservoir could cover 1,500-2,000 acres in the Mosman-Rockingham leases where the Company's WI has 95-100% WI.
Other Projects
A number of multi-well and resource oil projects are being investigated targeting projects which have a potential value to the Company similar to that of our current Eagle Ford holding. We plan to begin taking leases on one or more of these projects over the coming months with a view to beginning drilling towards the end of this year.
Corporate
Options
In April 2,500,000 unlisted options with an exercise price of A$0.50 were exercised providing funds of A$1,250,000 to the Company. There remain 10,700,000 unlisted options to be exercised between May 2012 and November 2016. Issued fully paid ordinary shares are now 245,039,848.
(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.
(*) The Eagle Ford reserves were assessed by Netherland, Sewell & Associates Inc. Other reserves of 1.55 mmboe were taken to be the 2010 year end reserves determined by Hainey & Hainey less production in 2011. Netherland, Sewell & Associates Inc. and Hainey & Hainey are qualified in accordance with ASX Listing Rule 5.11. Netherland, Sewell & Associates Inc. has consented to the form and context of the Eagle Ford reserves shown in this report.
To view the complete Texon Petroleum Quarterly Report, please refer to the following link below:
http://media.abnnewswire.net/media/en/docs/ASX-TXN-241479.pdf
Contact
Texon Petroleum Ltd
T: +61 7 3211 1122
F: +61 7 3211 0133
E: texon.info@texonpetroleum.com.au
WWW: www.texonpetroleum.com.au
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