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30 Jun 2008 07:00
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PRESS RELEASE
JuneΒ 30Β 2008
Sefton Resources, Inc. ("Sefton Resources" or the "Company")
OPERATIONS UPDATEΒ AND EQUITY DEALINGS
Sefton Resources, theΒ AIMΒ listed oil and gas production company with assets in California and Kansas, announces an update through its wholly owned subsidiary TEG Oil and Gas Inc. ("TEG") regarding the Tapia 2008Β Q1Β Drilling and Pilot Steam Programme, and equity transactions involvingΒ twoΒ directorsΒ and two loan note holders.
OPERATIONS UPDATE
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Tapia Field - Cyclic Steaming PilotΒ Programme
The second well in the steam pilot, Yule #10,Β willΒ beΒ returned to productionΒ July 1,Β 2008, following aΒ successfulΒ three week steam soak cycle. The first well,Β Yule #7 is producing at elevated temperatures 20Λ above that of untreatedΒ wells after two months of production, indicating good heat retention of the steam energy in the surrounding reservoir. Production on the Yule lease has been relatively steady despite having the Yule #10 off-line duringΒ itsΒ steam-soak period. This isΒ mainly due to theΒ increased productive rate of the earlier steaming of Yule #7.
Tapia Q1 2008 Wells
TEG is in the process of evaluating theΒ productionΒ and reservoir informationΒ from the three Snow lease wells. The wells continue to produce with good oil cuts. The wells are currently being considered as the next cyclic steam candidates, given their proximityΒ toΒ the lease gas source well, Snow #1. TEGΒ will continue with implementing different pump arrangements to maximize the productive rates from these wells. The installation of a larger pump in the Lackie #A-4 well has increased the production from the well byΒ 30% toΒ 35% based on daily metered well tests.
Water ProductionΒ NormalΒ in Oilfield Operations
In response to someΒ shareholdersΒ enquiriesΒ regarding water production in TapiaΒ oilfield operationsΒ Harry Barnum, managing director of TEG Oil & Gas comments:Β
'Water naturally occurs in virtually all oil reservoirsΒ in varying percentages and thus is produced along with crude oil in theΒ normalΒ production stream from any given oil well. The exception to thisΒ may beΒ newΒ wellsΒ thatΒ produceΒ from aΒ newΒ oil reservoir. Over the life of a wellΒ (and later in the productive life of an oilΒ reservoir),Β the percentage of water gradually increases. The Tapia field has been producing oil (and water) for over 50 years and has a future productive life of an additional 40 years based on the most recent independent engineering reserve report conducted on the field. The average water cut (2007 annual data) for California District 2 oilfields (44 oilfields in the vicinity of Tapia) is 86%. Tapia produces very nearΒ toΒ that average at approximately 90% and thus,Β is typical for the region. TEG has recently upgraded the water handling facilities at Tapia as reported earlier, in anticipation of new wells and steaming operationsΒ and manages the oil as part of the operation.Β All produced water is separatedΒ from the crude oil at the Tapia production facilities and is re-injected into the subsurface. This aids in maintaining subsurface pressures and sustains well productive rates'.
Eureka Canyon Field - Well Work
TEG has completed the clean outs and pump changes this week for wells in the Eureka Canyon Field. This is part of the normal cycle of well maintenance for this field. All wells capable of oil production are now returned to production. The periodic well clean outs remove silt and very fine sand that collects in the well over time and allow better exposure of the oil zones for production.
Chairman's comment
Commenting on the current situation, ChairmanΒ Jeremy Delmar-MorganΒ said:Β
'The year has startedΒ successfully. We continue to trade profitably and cash flow is running at expected levels. This is enabling us to push ahead with the steaming and drilling progammes outline in my last Chairman's statement. None of the problems that we have encountered in the pilot steaming programme were unusual;Β we believe thatΒ they can be resolved and provide excellent data for the ongoing programme'.
EQUITY DEALINGS
OnΒ 24 JuneΒ 2008, two note holders of the company converted notesΒ totalingΒ $7,000 into 47,425 shares at a conversion price of 7.5p.
In addition,Β alsoΒ onΒ that date,Β two directors, Mr. A. Ashton andΒ MrΒ J.Β Delmar-Morgan exercised options toΒ subscribe forΒ 150,000 shares each at 6p per share, following which Mr. A. Ashton now holds 1,098,267 shares and Mr. J. Delmar-Morgan 4,780,178 shares representing 0.9% and 4.1% of the total voting rights respectively.
Application will be made for a total ofΒ 347,425 new common shares in Sefton Resources to be admitted to trading onΒ AIMΒ and admission is expected to take place onΒ 4Β July 2008.
Enquiries:
Jeremy Delmar-Morgan, Chairman, Tel: 077 8900 4874
John James (Jim) Ellerton, CEO, Tel: 00 1 303 759 2700
David Millham, Investor Relations, Tel:Β 07850 949324
Jonathan Wright/Nicola Marrin,Β SeymourΒ Pierce, Tel: 020 7107 8000
Note: The information in this release has been compiled and reviewed by Harry Barnum, a director of Sefton, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr. Barnum has Bachelors and Masters Degrees in Geology and over 25Β years of experience in the oil and gas industry. He is a registered professional geologist in the State ofΒ California.
Sefton Resources is an AIM listed oil and gas production company. Its main core area 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 (medium gravity 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 Eastern Kansas where Coal Bed Methane gas, as well as conventional oil and gas deposits, are targets.
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