”Vertical Mississippian well in Texas requires nitrogen clean-out, replacement of tubing and rods, various surface infrastructure repairs, and repair of downhole pump.
The well reached a daily production rate of 32 bopd and 160 mcf natural gas in 2020.
The Covid oil price collapse has led to the need for outside financing to fund repairing and returning the well to production.
The operating team has over 70 years of combined direct experience in geology and oil & gas production and workovers in the local area. Company is a low-cost operator, with Admin/OH rate of $1,500/mo. There is a below-market long-term electricity contract in place which saves ~40% compared to current market electricity rates. Operator owns a nearby saltwater disposal well with all infrastructure in place for disposal by pipeline at $0.45/bbl, saving ~70% compared to trucking and disposal of produced saltwater.
Pro Forma cash flow to 100% Working Interest after returning the well to a production rate of 32 bopd and 160 mcfd is $45,000 per month.
The capital requirement for the project is approximately $150,000, but up to $300,000 for a Working Interest sell-down is available.
Company is flexible on deal terms including:
1) direct Working Interest sale to fund repairs,
2) net profits production payment loan (50% of net profits until repaid with 7% interest, along with a perpetual Working Interest kicker, or
3) majority Working Interest sale of up to 60% including operations, with company retaining at least 40% Working Interest
4) or some combination of above
Geological study indicates potential offset locations in multiple formation/depths, to be leased and drilled, participation rights are offered and a non-compete/non-disclosure agreement is required to review the information.”
- Category : Drilling Programs