Here is information on Coconino Oil & Gas.
This information is used to supplement information already presented in the Dec. 1 press release. The joint venture agreement should be finalized by the beginning of January.
Shortly after the agreement is finalized, they will start drilling the first of 8 planned wells. I was provided with a portion of the TDTP log analysis which shows formations at about 3800 ft. and about 3400 ft. Because of the porosity of the formation (20%), the natural gas permeates through the whole formation so offset wells are an excellent indication of the production rates of these wells.
One of the biggest concerns of investors in this thread is the expense of drilling these wells. These are inexpensive wells compared to oil wells. Each well can be drilled in one to three days at a cost of $50,000 per well. These are shallow wells for gas, not deep expensive wells for oil.
Additionally, the gathering system is nearby and the main hookup is already available. The plan is to drill the first well and analyze the results. The timeframe for additional wells will be determined at that point in time taking into consideration rig availability.
The first formation that they plan on drilling is at 3800 ft. It is projected that this formation will provide one to three billion cubic feet (BCF) of natural gas valued at about $2.41 million to $7.23 million.
It is projected that each well will produce 1 million cubic feet (MCF) a day. Offset wells that are used for comparision purposes ranged from 1.1 to 2.4 MCF a day. As they say, your mileage may vary. At a level of 1.0 MCF a day, each well would provide over $2,000 revenues each day and 8 wells could provide over $16,000 revenues per day.
After a few of these wells are in production, CSMA will have an increase in Net Present Value (NPV). As the property contains an estimated 50 to 100 billion cubic feet, this will give CSMA an increase in Net Present Value of $70 million.
The location of this property is not currently being made public because the company is pursuing other lease potentials in the surrounding area.
The following link is provided as it is a close property and could give some insight:
biz.yahoo.com
This information was gathered by me and I welcome any corrections to this information.
David |
