The Sebree, Kentucky Oil Development Program
- Aus-Tex holds a 50% WI and a 37.5% NRI
- Target formation is Tar Springs Sand
- Estimated recovery of 80,000 barrels of oil
- Five well drilling program envisioned
- Two wells currently drilled and shut-in pending completion of salt water disposal well (est. August)
- Three additional wells to be drilled and completed prior to end of 2010
- Daily production estimated at 24-32 barrels of oil
ABOUT THE ASSET
This project is located near the small town of Sebree, Kentucky in the north west part of the state. It is sometimes referred to by the mineral lease names associated with the project; the Russell and Major leases. Wells in this field produce both oil and saltwater.
After several weeks of oil production during December 2009 and January 2010, Aus-Tex determined that costs associated with saltwater removal via transport trucks was too expensive to continue pumping. At that time, the Sebree project was delivering nearly $25,000 per month of income from oil production to the 100% interest of the parties while also creating nearly the same amount of expenses due to water removal via transport truck. The operator was instructed to temporarily shut-in the two producing wells and immediately began the permitting process for a saltwater disposal injection well.
The saltwater disposal well is now permitted and being readied for initial testing. The operator anticipates having the disposal well in full operation by mid August at which time the currently completed oil wells will be connected and infrastructure testing will being. Produced oil will be moved to storage tanks for sale and produced saltwater will be disposed of by pumping it back into the ground.
Aus-Tex will then complete the three remaining wells on the Russell lease. The Company intends to test the Tar Springs formation in each well. All producing wells will utilize the saltwater injection well for disposal and a common tank battery for oil storage to sales.
About the Project
- KOS Energy of Canada is the operator of record.
- Aus-Tex acquired this already producing asset on December 17th 2009.
- Quality infrastructure is in place, with oil transport and sales contracts completed.
- The primary hydrocarbon focus of this project is oil.
Oil production from this property prior to the December 17th 2009 acquisition was emanating from a single well at rate of six-to-10 barrels of oil per day. The well produced an oil to water cut ratio between 12% and 17% (oil) thus water removal is requirement.
- Other well re-entry candidates are on the adjoining Major lease, however, they have not yet been evaluated to determine economic viability
- A reserve report and cash flow model was completed by a third party, JORC qualified geologist and it was released to the market on February 4th, 2010.
- The wells are located in Webster County, Kentucky