SER.L Regulatory News (SER)

19 Mar 2008 07:00

Sefton Resources Inc19 March 2008 SEFTON RESOURCES, INC ("Sefton" or the "Company") QUARTERLY UPDATE Sefton Resources, Inc., the AIM listed oil and gas production company withassets in California and Kansas, announces that its wholly owned subsidiary TEGOil and Gas USA, Inc. ("TEG USA") has completed successful drilling at itseleventh well. TEG USA has now successfully drilled all of the leases, thusextending production in the entire Tapia field. In addition, TEG USA willinitiate a pilot steam programme on March 20, 2008 on two wells at its YuleLease. Recent drilling since November, 2007 has significantly improved cash flowand the four additional wells should add to this improvement. Q1 Drilling Programme Complete TEG USA has successfully completed the Q1 2008 four-well drilling programme atits Tapia oil field in California. Each of the four step-out wells encounteredgreater than 90 feet of oil-saturated Yule sandstone reservoir as follows: WELL OIL ZONE THICKNESS Snow #3 142 feet Snow #4 106 feet Snow #5 96 feet Lackie #A-4 92 feet All four wells had excellent mudlog oil shows while drilling, with oil in therock cuttings and drilling mud. Wireline logs in all wells displayed resistivityreadings indicative of oil productive sands. These appear equal to, or betterthan, TEG USA's other development wells drilled in the field over the past twoyears. These results are particularly exciting since these wells extend TEGUSA's productive area of the Tapia field, both to the west (Snow wells) and tothe east (Lackie well). Sefton anticipates that the Snow wells will be placed onproduction within a week and the Lackie well later, once flow lines andelectrical facilities are extended to this lease. Tank facilities for theserecent wells have recently been completed. Gas Zones Verified Natural gas bearing sandstones were identified in all four wells drilled at adepth of approximately 800 feet. The gas sands encountered were approximately 20feet in thickness. In the Snow area, these results verify and expand earliervolumetric mapping of the gas sands that had tested at a rate of over 1,200,000cubic feet of gas per day in the Snow #1 well in December, 2003. It is this gasthat Sefton is in the process of piping to the steam generator. The gas sand identified in the Lackie #A-4 well was previously unknown and mayadd to the natural gas reserve base. No gas sands had previously been mappedeast of the Hartje #2 well, which is located approximately 700 feet west of therecently drilled Lackie #A-4 well. Additionally, an offset operator's well, the J.L. Brandon #2 well, encounteredgas at a similar depth as indicated on the mudlog when the well was drilled inmid-January, 2008. TEG USA does not have copies of the Brandon well data, buthopes to obtain copies when they are made public in approximately 60 to 90 days.This well is located approximately 800 feet north of the Lackie #A-4 well. Increased Water Handling Ability TEG USA has completed the realignment of the produced water processingfacilities at the Tapia Field. The improvements have effectively doubled theamount of produced water that can be processed at Tapia. Included in therealignment was: •Reworking/acidizing the Hartje #8 injection well and returning it to injection for use along with the Hartje #9 injection well. •Adding a produced water tank at the Yule Tank facility. •Adding a produced water tank at the Hartje tank facility. •Installing two new produced water transfer pumps. •Increasing the size of the produce water piping at the Yule and Hartje facilities to handle high flow volumes. •Relocating the injection pump and installing a backup pump at a more efficient location near the Hartje tank facility. •Installing new injection pipelines from the injection pumps to the Hartje #8 and #9 injection wells. •Old water tanks for the Tapia field will be removed in the coming weeks. This improvement should allow TEG USA to seamlessly add new wells to theproduction stream and allow for increased water production spikes due to cyclicsteaming of the wells. Cyclic Steaming The 14 million BTU Steam Generator has been surface tested and tuned for the useof propane as a temporary fuel. The testing of the steam generator by ventingsteam at the surface was very impressive and exciting. The generator wasoperated at 100% output design capacity during the testing. During the test thenitrous oxide emissions recorded were 10ppm, well under the limits of the airpermit. Sefton has received the final permit for the propane tank from the LAAir Quality Management District (AQMD). The steam generator is now capable ofrunning on both propane and natural gas. Sefton is in the process of laying agas supply from the Snow #1 gas well to the steam generator so both propane andits own leased natural gas can be used at the Company's option. The Yule #7 wellhas been prepared for steam injection which will commence on Thursday, March 20,2008. Further Development Now that all leases have been drilled and steam testing will yield resultsshortly, a comprehensive follow-up drilling and steaming development plan can beformulated for implementation this year through the next several years. Commenting, Jim Ellerton, CEO, said: "We are extremely pleased that, with successful drilling results at Tapia andimproved cash flow, Sefton and its subsidiaries are now in the position of beingable to be flexible in deciding how to: •Complete the full development of Tapia Field •Further develop Eureka Canyon Field, and •Initiate a pilot drilling programme within its Kansas CBM acreage." The Company's website is being updated with regard to this announcement and willalso include items such as photographs, etc, which it is not possible todisseminate via the regulatory information system. For additional information visit www.seftonresources.com Enquiries: Jeremy Delmar-Morgan, Chairman, Tel: 077 8900 4874John James (Jim) Ellerton, CEO, Tel: 00 1 303 759 2700David Millham, Investor Relations, Tel: 07850 949324Nicola Marrin, Seymour Pierce Ltd., Tel: 020 7107 8000 Note: The information in this release has been compiled and reviewed by HarryBarnum, a director of Sefton, who is a qualified person for the purposes of theAIM Guidance Note for Mining, Oil and Gas Companies. Mr. Barnum has Bachelorsand Masters Degrees in Geology and over 20 years of experience in the oil andgas industry. He is a registered professional geologist in the State ofCalifornia. Sefton Resources is an AIM listed oil and gas production company. Its main corearea of activity is in the East Ventura Basin in California, where it owns 100%of two oil fields, Tapia Canyon (heavy gravity oil) and Eureka Canyon (mediumgravity oil), both of which have over twenty years of expected production life.In addition, Sefton has over 40,000 acres in the Forest City Basin of EasternKansas where Coal Bed Methane gas, as well as conventional oil and gas deposits,are targets. This information is provided by RNS The company news service from the London Stock Exchange