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24 Aug 2009 07:00
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Sefton resources inc.
operations update
Sefton Resources Inc, (Sefton), the AIM listed oil and gas production company with assets in California and Kansas, announces further advances in its planned development programmes for its two wholly owned subsidiaries, TEG Oil and Gas USA, Inc (TEG USA) and TEG MidContinent (TEG). These follow on from the last update onΒ May 6, 2009.
TEG Oil & GasΒ USA
TEGΒ USAΒ Production and Revenue - TEGΒ USAΒ sold a total ofΒ 4381Β bbl. of oilΒ from itsΒ CaliforniaΒ oilfieldsΒ during the month ofΒ JuneΒ resulting in gross revenue of $272,957.66Β for the month received inΒ July, 2009. TEGΒ USAΒ received approximately $62.05/bbl and $65.90/bbl forΒ the Tapia andΒ EurekaΒ crude, respectively,Β an increase of over $9/bbl as compared toΒ the previous month. Trendline analysis on production since June, 2006 shows a steadily climbing averageΒ production forΒ TEGΒ USA oilfields. The trend reflects the successful oilfield redevelopment and initiation of the cyclic steam programme.
Tapia Oilfield - Cyclic Steaming Programme
TEGΒ USAΒ initiated the field-wide cyclic steam programme during the months of June and July, using propane as the fuel source. Current oil prices allow the flexible use of fuel in the well stimulation economics. The three steamed wellsΒ were returned to production byΒ July month's end. TheΒ wells are producing oil at rates in excess of pre-steam levels. The steam generator is now being moved to the Yule LeaseΒ as TEG continuesΒ advancingΒ the programmeΒ in a west toΒ east progressionΒ across the field.
There are currentlyΒ 15Β wells in the Tapia OilΒ Field capable of being steamedΒ field-wide. An additionalΒ 6 wellsΒ willΒ be added to the programme following downhole mechanical upgradesΒ that will allow them to be subjected to the higher temperatures and pressures associated with steaming. Plans are to incorporate this work into the second phase of steaming progression across the field. The second phase will also include the construction of gas, water and electrical supply branch linesΒ to accommodate these additional wells. This construction can be accomplished over approximatelyΒ a two month period, well in advance of these additional wells being ready.
Gas SupplyΒ - The Yule #9 well continues to produce small amounts of gas, however it is burdened by completion fluid that is impeding theΒ steadyΒ flow of gas through the near wellboreΒ rockΒ formation and by the column of water in the well that it is not able to unload. TEG moved a pumping unit on to the well and will begin periodically pumping the water off in order to stimulateΒ steadyΒ gas production. TheΒ pumping unit canΒ alsoΒ be later usedΒ when the well is re-completedΒ for oil production in the deeper oil zone,Β after theΒ utilization ofΒ the shallowΒ gasΒ for the steam programme.
As a backupΒ to lease gas,Β TEG hasΒ recentlyΒ signed contracts forΒ bothΒ gasΒ transmission and purchase through the Southern California Gas Company utility system. Metering and supply piping for thisΒ suplyΒ will be installed during the month of August and be available for TEG's useΒ on or aboutΒ September 1, 2009. This contract will supplement TEG's other sources of steam fuel at a steady price schedule and allow the steaming to progress without interruption due to fuel. It will also allow TEG to plan worst case economic forecasts with greater accuracy for this project.
Tapia Oilfield -Β Β New WellΒ Planning
Β TEGΒ is in the process of permitting new wells for the Tapia Oilfield.Β These includeΒ high angle wells on the Snow Lease andΒ Yule Lease and aΒ moreΒ conventionalΒ directional wellΒ planned forΒ the Hartje Lease. We anticipate that the permittingΒ will only take a few weeks to be approved by the State of California Division of Oil Gas & Geothermal Resources. Permitting through The US Bureau of Land Management and also theΒ CountyΒ ofΒ Los AngelesΒ is expected to take three to four months.
EurekaΒ Cayon Prospects
TEG is in the process of developing drilling prospect locations by taking the encouraging geochemical survey results and merging these with the surface geology atΒ Eureka. The target completion for this work is fourth quarter 2009. Prospects will then be presented and evaluated for drilling.
TEG MIDCONTINENT
AndersonΒ /Β FranklinΒ Counties,Β KansasΒ Drilling Programme
Consultants working with the TEG staff prepared a completion programmeΒ for the Miller A2-1 well. TEGΒ management has determined that completion of the well should precede the proposed construction of pipeline into the acquired Petrol gathering and disposal line and further should precede additional drilling. FollowingΒ favorableΒ results of testing, TEGΒ willΒ commence with the drilling of additional wells on the threeΒ permittedΒ locations and concurrently initiate construction of theΒ gasΒ gatheringΒ pipelineΒ system. TEG has contracted with a consulting engineer to oversee a well abandonment program on the Petrol acquired wells that have been determined to have no future value.
LeavenworthΒ County,Β KansasΒ Project
TEG has negotiated and executed a "Letter of Intent" to purchase fromΒ HDP Inc., their inactive pipeline and gas gathering system, to include Right-of-way. TEG has initiated "due diligence" which has consisted of record checks in both Jefferson andΒ LeavenworthΒ CountiesΒ and physical inspection of line. A formal Purchase and Sale Agreement has been forwarded to HDP for review and comments. TEG isΒ nowΒ working closely with the seller to cure title deficiencies and to formalize the transaction. Closure of this deal will add considerable value to TEG'sΒ LeavenworthΒ acreage position.
The "Vanguard Pipeline" is located west and north of TEG'sΒ LeavenworthΒ project, an area presently subject to "curtailed/seasonal gas sales. The pipeline will provide a gathering system for TEG's future drilling and will establish a basis for potential joint ventures in both exploration and gas gathering and transportation. Total Purchase price is $115,000.00. Β
During these "low gas price" times, we believe it is more cost effective to put necessary "infrastructure" in place in order to capitalize on gas price recoveries.
Concurrently with its activities inΒ LeavenworthΒ andΒ JeffersonΒ Counties, TEG commissioned a regional engineering study that concluded and supported TEG's premise that the area contains potential for oil and gas and that further development is warranted and that the area could support the gathering systems that TEG is pursuing.
SEFTON
Investor Relations
Although we have talked about such, we plan to make this a high priority this coming year.
Merger/Acquisitions
During these times of lower oil and gas pricings, we have established a set of economic parameters that will focus on acquisitions in our "core" areas - while we also look towards a long term view of merging compatible assets and personnel to achieve "critical size".
Sefton has established a list of criteria to guide our growth in regards to acquisitions and merger opportunities. It is our belief that during this plateau in oil and gas pricing, there is good opportunity to expand our portfolio to critical size and strengthen our core areas of operation and development. Sefton hasΒ looked at a number of such opportunities during 2009 and will actively continue this process in the coming months.
Interim Financials
We expect to publish our 6/30/09 interim financials in early September.
24 August 2009
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Enquiries
Jeremy Delmar-Morgan, Chairman, Tel: 077 8900 4876
John James (Jim) Ellerton, CEO, Tel: 00 1 303 759 2700
Nick Harriss/Wye-Li Long, Blomfield Corporate Finance Ltd.(Nomad), Tel: 020 7489 4500
Daniel Briggs/Alan Rooke, Religare Hichens Harrison plc (Broker), Tel: 020 7382 7776
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 20 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 45,000 acres in the Forest City Basin of Eastern Kansas where Coal Bed Methane gases, as well as conventional oil and gas deposits, are targets.
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