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Petrosearch Announces 2006 Planned Activities
HOUSTON -- December 20, 2005 -- Petrosearch Energy Corporation (PTSG.OB) (“Petrosearch” and the “Company”) today announced its drilling and capital expenditure plan for several major projects for next year. The plan encompasses total capital expenditures net to the Company of between $15 million and $20 million and includes participation in the drilling of 25 to 30 wells.
In announcing the Company’s plan for 2006, Mr. Richard Dole, President and CEO of Petrosearch, said, “The plan envisions moving forward in four new project areas and four projects already in various stages of implementation. Our intent is to aggressively build net asset value from our existing base of approximately $78 million of SEC PV-10 proved reserves (as of September 30, 2005), which represent about 2.8 million barrels of oil equivalent (boe). These proved reserves equate to approximately $2.80 per share of common stock outstanding. Underlying the Company’s properties are estimated additional probable and possible reserves of 20 million boe.” Dole added that “In 2006 the Company will focus on these high impact projects and on converting proved reserves to cash flow.”
Planned New Projects: Mississippi Tuscaloosa Projects The Company has identified five Tuscaloosa oil prospects in the Mississippi Inland Salt Basin, in Yazoo County, comprising a maximum of 2,240 acres and up to 22 drilling locations, 8 locations to be drilled in 2006, ranging from 6,300 feet to 7,500 feet in depth. Total targeted gross reserves are approximately 10 MMboe. Approximately 30% of the required acreage has been leased and seismic data on the prospects is being reprocessed. The initial well in this group of projects is expected to be spudded in the second quarter of next year. Depending on success as many as 8 wells will be drilled during 2006. Petrosearch owns 100% of the prospects and will operate the project. Central Texas/Gulf Coast Projects Tait Projects -- Colorado County, Texas. This is a natural gas prospect with the potential of up to 7 locations on 1,250 net acres. The primary targets, two zones in the Upper Wilcox at approximately 10,000 feet, have potential combined gross reserves of 2.7 Bcf and 50 Mbo per well. All acreage has been leased and Petrosearch has acquired and analyzed 3-D seismic data on the prospect. The initial well has a planned spud date in the first quarter of 2006. Up to 7 wells in the project are planned for 2006. Petrosearch has a 10% working interest. Burleson County, Texas, Projects -- A multi-well natural gas project that includes a total of 15 development and step-out locations in the Austin Chalk and Georgetown formations at approximately 10,000 feet vertical depth on a maximum leasehold position of up to 8,400 acres. Horizontal wells are planned with total measured length of approximately 13,000 feet. Total targeted potential gross reserves are 2.5 Bcf and 50 Mbo per well. The initial well is planned to be spudded in the second quarter of 2006. A total of 4 wells are planned for 2006. Petrosearch will have up to a 37.5% working interest depending upon its leasehold contribution to the project. North Texas/Panhandle Waterflood Project Petrosearch recently acquired a 100% working interest in 1,780 acres in the Quinduno Field in Roberts County, Texas, in the Anadarko Basin, representing proved reserves estimated by Ryder Scott at 2.59 million barrels of oil (MMbo) and 1.4 Bcf feet of gas with a PV-10 value of $45.5 MM (at September 30, 2005). The purchase price equated to $3.37 per proved boe. As operator, the Company intends to extract the reserves through conventional waterflood technology. The first phase of the project will begin in the first quarter of 2006. During 2006, one new producer will be drilled, a minimum of 4 old wells will be converted to water injection and water injection will begin. Existing Projects: Rodney Island, Tensas Parish, Louisiana The Company took over operations of the Harper Z-1 well on this prospect from the previous operator after casing was set and cemented. The Company is in the process of completing the well that was directionally drilled to a measured depth of 11,701 feet (vertical depth = 9,373 feet) and logged approximately 37 feet of oil sand in the Tuscaloosa Massive Sand. Re-mapping based on the additional data from the Harper Z-1 well indicates as many as 2 more proved locations, 2 probable locations and 1 possible location. Internally estimated gross reserves are: proved – 861 Mbo and 523 MMcf, probable – 578 Mbo and 347 MMcf and, possible – 289 Mbo and 174 MMcf. The Company has 25% working interest in before payout in the Harper Z-1 well and 18.75% working interest after payout. The Company has 18.75% working interest in all additional wells. Gruman 18-1, Stark County, North Dakota After recently purchasing an additional 21.25% working interest, the Company owns an 85% working interest in this Lodgepole reef oil well. Petrosearch plans to drill a 9,900 feet increased density well updip of the Gruman 18-1 well into the productive reef. Depending on the success of this new well, one or the other will be converted to water injection. Proved developed reserves to the Company are currently estimated to be 368 Mboe. The increased density well is expected to add approximately 300 Mboe net to the Company. The company expects to complete hearings, permits and spud the well in the first quarter, subject to rig availability. SW Garwood, Colorado County, Texas The initial well on this prospect, the Pintail #1, completed in the Upper Wilcox in December 2004, is expected to pay out in the first quarter of 2006 from the first of 5 potentially productive zones. The well is currently producing approximately 590 Mcfd and after pay out the Company will back-in for 33-1/3% working interest. The second well, Pintail Flats #1, was completed and fracture stimulated in May, 2005 in the deepest sand penetrated by the well in the Lower Wilcox. Completion problems resulting from the fracture treatment have resulted in the well under-performing (approximately 210 Mcfd) compared to expectations from this zone. An engineering review of available data is underway to determine the best way to maximize the production rate from the current zone. The well has an additional 5 potentially productive zones in the Lower Wilcox and 3 in the Upper Wilcox. Net proved reserves of the prospect are estimated at 214 Mboe and probable and possibles add 770 Mboe based upon a reserve analysis by Ryder Scott. The Company has between 13-1/3% and 33-1/3% working interest in all wells in the project after pay out on a well-by-well basis. The cost of the wells has been funded by our drilling partner. Buena Vista, Jefferson County, Mississippi The Company fracture stimulated and tested approximately 80 feet of potentially productive sands at the base of the Hosston zone without establishing commercial production in the Phillips-Burkley #1 well during 2005. The presence of gas was established but production rates were disappointing. These sands have been abandoned and work is ongoing to exploit approximately 280 feet of potentially productive Hosston sands up-hole, which have superior properties compared with the sands already tested. This work will continue through the first several months of 2006. This is an exploratory gas well on a leasehold position of 7,481 acres which is being funded by an institutional investor. Petrosearch is the operator and has an “after payout” reversionary interest ranging from 12.5% to 25% in each well funded by the institutional investor on the leasehold. If commercial reserves can be established, the structure could support in excess of 22 additional wells. Summary In summarizing the plan, Dole said, “Our plan is focused in these eight key projects that we already have in house and have begun to execute during the past few months. We anticipate that the capital expenditure budget will be funded from our equity capital, from a revolving line of credit previously announced, cash flow from the projects, joint venture partners, and other potential financing sources. We will keep our schedule flexible in order to take advantage of changes in availability of rigs and services and financing, and to rapidly exploit those projects that experience early success.” The Company previously announced extensive information concerning several of its properties and projects at the Equities Magazine Winter Conference held in New York City in early December. A Webcast of this presentation may be accessed at the Company’s website, www.petrosearch.com. |
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