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24 Aug 2009 07:00
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 on May 6, 2009.
TEG Oil & Gas USA
TEG USA Production and Revenue - TEG USA sold a total of 4381 bbl. of oil from its California oilfields during the month of June resulting in gross revenue of $272,957.66 for the month received in July, 2009. TEG USA received approximately $62.05/bbl and $65.90/bbl for the Tapia and Eureka crude, respectively, an increase of over $9/bbl as compared to the previous month. Trendline analysis on production since June, 2006 shows a steadily climbing average production for TEG USA oilfields. The trend reflects the successful oilfield redevelopment and initiation of the cyclic steam programme.
Tapia Oilfield - Cyclic Steaming Programme
TEG USA 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 wells were returned to production by July month's end. The wells are producing oil at rates in excess of pre-steam levels. The steam generator is now being moved to the Yule Lease as TEG continues advancing the programme in a west to east progression across the field.
There are currently 15 wells in the Tapia Oil Field capable of being steamed field-wide. An additional 6 wells will be added to the programme following downhole mechanical upgrades 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 lines to accommodate these additional wells. This construction can be accomplished over approximately a two month period, well in advance of these additional wells being ready.
Gas Supply - The Yule #9 well continues to produce small amounts of gas, however it is burdened by completion fluid that is impeding the steady flow of gas through the near wellbore rock 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 stimulate steady gas production. The pumping unit can also be later used when the well is re-completed for oil production in the deeper oil zone, after the utilization of the shallow gas for the steam programme.
As a backup to lease gas, TEG has recently signed contracts for both gas transmission and purchase through the Southern California Gas Company utility system. Metering and supply piping for this suply will be installed during the month of August and be available for TEG's use on or about 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 - New Well Planning
TEG is in the process of permitting new wells for the Tapia Oilfield. These include high angle wells on the Snow Lease and Yule Lease and a more conventional directional well planned for the Hartje Lease. We anticipate that the permitting 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 the County of Los Angeles is expected to take three to four months.
Eureka 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 at Eureka. The target completion for this work is fourth quarter 2009. Prospects will then be presented and evaluated for drilling.
TEG MIDCONTINENT
Anderson / Franklin Counties, Kansas Drilling Programme
Consultants working with the TEG staff prepared a completion programme for the Miller A2-1 well. TEG 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. Following favorable results of testing, TEG will commence with the drilling of additional wells on the three permitted locations and concurrently initiate construction of the gas gathering pipeline 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.
Leavenworth County, Kansas Project
TEG has negotiated and executed a "Letter of Intent" to purchase from 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 and Leavenworth Counties and physical inspection of line. A formal Purchase and Sale Agreement has been forwarded to HDP for review and comments. TEG is now working closely with the seller to cure title deficiencies and to formalize the transaction. Closure of this deal will add considerable value to TEG's Leavenworth acreage position.
The "Vanguard Pipeline" is located west and north of TEG's Leavenworth 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.
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 in Leavenworth and Jefferson 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 has 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 of 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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