You guys should look harder...$7.4 million US deal....
Hadro Resources Inc. Announces Proposed Purchase of Operating Oil and Gas Producing Assets
Hadro Resources Inc. Announces Proposed Purchase of Operating Oil and
Gas Producing Assets
RENO, Nev., Jun 1, 2001 /PRNewswire via COMTEX/ -- Purchase of Three Subsidiary
Interests: Hadro Resources, Inc. ("the Company") (OTC Bulletin Board: HDRS) is
pleased to announce that it has entered into a definitive agreement with U.S.
Oil and Gas Resources Inc. ("US Oil and Gas"), a British Columbia company
trading on the CDNX exchange, to purchase its interests in three State of
Oklahoma registered private operating subsidiaries as follows: an 100% interest
in Oakhills Energy Inc., a 100% interest in Thor Energy Inc., and a 100%
interest in O.J. Oil & Gas Inc. ("Operating Subsidiaries"). Subject to further
due diligence by the Company, and CDNX and US Oil and Gas shareholder approval,
the Company plans to issue 10 million common shares to US Oil and Gas as
consideration for the purchase of the interests in the three Operating
Subsidiaries. The Operating Subsidiaries contain three distinct production and
exploration opportunities for the Company as follows:
Existing Production: The Operating Subsidiaries contain an estimated 3,000 acres
of oil and gas leases, and approximately 14 gas and 35 oil wells at various
levels of production in addition to untapped areas for future wells. It is
estimated that current gross annual production of approximately $400,000 per
annum can be increased to $800,000 to $1,000,000 in a short period of time with
approximately $250,000 in capital required to re-work, maintain, and to open
shut-in wells that are now economic due to current market conditions. US Oil and
Gas has spent considerable resources on developing its subsidiary's oil and gas
production management and infrastructure based in Holdenville, Oklahoma. Recent
activities also include decreasing oil and gas operating costs though the sale
of high operating cost wells and increasing gas component production by the
liquidation of oil production. The production would provide the Company with
revenues, cash flow, and producer status. Based on the evaluation produced by
Fletcher Lewis Engineering, Inc. dated May 8, 2001, the assets of Oakhills
Energy Inc. have estimated Future Net Revenues as listed below:
Category Future Net Revenue
Proven Developed Producing $2,916,943
Proved Developed Nonproducing 825,703
Behind Pipe 944,838
Probable 795,173
Total $5,482,657
The Company plans to carry out more extensive investigation of current
production capabilities of the shut-in wells, detail the required capital to
bring shut-in wells onstream, perform a revenue-operating cost analysis of the
producing wells, and assign asset values to lands held by all wells to determine
cash requirements for future operations. It is expected that other area
production is possible through acquisition via the Operating Subsidiaries'
management and infrastructure.
Coal Gas Project: The Operating Subsidiaries also contain an existing coal bed
methane gas project of approximately 880 acres that requires the drilling of an
additional 11 horizontal wells to supplement the existing 11 wells that would
cost an estimated total of $1.6 - 2.2 million in drilling and completion costs.
4 of the existing 11 wells have never been fraced, and the balance require
maintenance or work over. Preliminary geological work conducted by the Company's
consulting geologist indicate that each well would produce an average of 77
MMCFG per day, to provide an estimated $2,000,000 in additional annual revenue
(gas price assumed is $4.50/MMCFG). The Company plans to raise required funding
to drill and complete the Coal Gas Project wells.
Comanche #I and #II Wells: Oakhills Energy Inc. owns rights to 640 acres of
leases in the prolific producing Anadarko Basin located in Comanche County,
Oklahoma. The leases contain two deep gas wells that are not currently in
production. The companies that drilled these two wells in the early 1980's had
drilling and completion costs of approximately $18 million.
The Comanche #I well was drilled to a total depth of 21,500 feet and was
completed in the Springer Goddard formation. The well blew out during flow back
and testing of a frac, and the well was lost after reporting flows of 50
MMCFG/day. The Company plans to investigate the possibility of re-entering the
well and completing in the Cunningham and Britt zones, which exhibit excellent
pay potential. The target pay zones are good behind pipe potential, which should
be above the well-bore problems associated with the blow out.
The Comanche #II well was drilled as a replacement to the #1, to a total depth
of 21,954 feet and was completed in the Boatright and Goddard formations. The
well produced approximately 375 MMCFG. The producing zones require evaluation by
evaluating bottom hole pressure data to determine the possibility of stimulating
or fracing these zones that have never been treated/tested. The Company has
several possibilities to evaluate, one being the removal of bridge plugs above
the Lower Goddard perforations at 21,094 feet to 21,413 feet where flow tests of
4 MMCFG/day were reported before it was abandoned to move to the Upper Goddard
and Boatright formations. Another option is to move up the hole, perforate, and
complete the Britt formation at approximately 18,100 feet, that shows to have
similar log characteristics and more net pay than the Quannah Parker #1-1
control well, a direct offset that has produced approximately 3 billion feet of
gas from this zone.
The Company is fortunate to have the opportunity to complete and develop
formations with this great potential without the expense incurred by the
previous operator in drilling and developing the Comanche I and II well
projects. Current geological investigations suggest the requirement of a
complete engineering review due to the complex nature inherent to the high
pressures of the deep zones in combination with new well completion technologies
available today to provide a scope of work and budget required to attempt
recompletions.
Moffat Ranch Prospect Gas Prospect - Madera County, CA
On April 26, 2001, the Company announced that it had entered into an agreement
with Northwest Petroleum, Inc. of Bakersfield, CA to explore and drill for oil
and gas on approximately 5,000 acres of leases located in Madera County,
California in partnership with Canadian Metals Exploration Limited. The Company
conducted geological due diligence on the project which was positive and within
the Company's acceptable risk profile, but final agreement with all parties on
the terms and conditions relating to joint funding participation was not
obtained. The Company will not be participating in this project unless future
agreement on necessary terms of funding is obtained.
SAFE HARBOR STATEMENT
Forward-looking statements in this release are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties, including, without limitation, commodity prices of precious
metals and actual results differing materially from projections because of
geological factors, operation factors, government regulations or factors relied
upon from independent sources, may either negatively or positively impact
exploration or mining operations. Forward-looking statements involve known and
unknown risks and uncertainties that may cause the Company's actual results in
the future periods to differ materially from forecasted results. The Company
assumes no obligation to update the information in this release.
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SOURCE Hadro Resources, Inc. |
