Growth through Joint Venture AGREEMENTS:
Austin Chalk (Pearsall leases) The company is currently reviewing joint venture proposals to develop the massive reserves located in the company's leases in the Pearsall field. Engineering surveys confirm proven reserves of over one million barrels. The company plans to start drilling on its Pearsall property in early 1998. The company plans to form two separate limited liability corporations with separate investment partners to finance the development of this asset. The projected revenue stream from these two projects is estimated at $20 million over the next five to 10 years.
Oil Prices To Double?
Like real estate, Earth is not making any more oil. As population increases and the economic boom in emerging industrial nations continues, the demand for oil keeps going up. World consumption of oil keeps increasing by 1.5 times each year. What this means is that we need to produce at least one million barrels of oil a day. Oil prices could double by the year 2000 (Worth Magazine, July/August 1996. p. 102). It has also been reported in Worth magazine that, "Low inventories and high demand should continue to lift energy prices, making these producers a good bet."
A Huge Market
The US Department of Energy estimates that the United States contains over 600,000 wells. Of these wells, 200,000 are in Texas and Oklahoma and the average volume is around 10.8 barrels a day. When initially drilled, a well has a high level of production. The first few years show a steep decline in production, followed by a very graduated decline, often over decades. Fortunately, records are kept for each well as to its history of production and future barrels per day can be determined with a high degree of certainty. Thus, when Nutek purchases a well, it knows exactly what it is getting and can predict revenues accordingly.
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