Latest Announcement: Operations Update 4 June 2013
Sefton Resources, Inc. (AIM: SER), the independent oil and gas exploitation and production company with interests in California and Kansas, announces an update on oil & gas exploration and production (“E&P”) operations in Kansas via its wholly-owned subsidiary TEG MidContinent Inc (“TEG MidContinent”).
- Kansas oil production increased to approximately 450 barrels a month in May 2013, from approximately 400 barrels in both March and April 2013.
- Obtaining clear title on the Dark Horse Operations assets (Leavenworth County, Kansas) is nearing completion. This will allow the Company to complete the acquisition of these assets, which includes 14 well bores. The working interest will increase from 42% to 100%, increasing reserves in Leavenworth County.
- Additional oil production is expected in the near future through the ongoing programme of workovers and recompletions on a number of wells in proximity to the Company’s 100%-owned pipeline system. To further improve oil recovery at the Dark Horse Operations, the Company has applied for a waterflood permit.
- The successful leasing programme in Eastern Kansas continues and discussions are taking place to secure additional leases in this project area.
- Negotiations have now reached an advanced stage with a potential supplier of third party gas in Leavenworth County. This gas should increase TEG Transmission’s inventory of gas capable of being marketed through its transportation system.
Commenting today, Jim Ellerton, Chairman of the board said:
“Sefton is making good progress in growing its oil and gas interests in Eastern Kansas. Acquiring the remaining working interest of the Dark Horse Operations, together with the ongoing programme of lease acquisitions, workovers and recompletions is expected to increase both production and reserves.”
For further information please visit www.seftonresources.com or contact:
|John James Ellerton, Chairman of the Board
||Tel: 001 (303) 759 2700
|Dr Michael Green, Investor Relations
||Tel: 0207 448 5111
|Nick Harriss, Nick Athanas, Allenby Capital (Nomad)
||Tel: 0203 328 5656
|Neil Badger, Dowgate Capital Stockbrokers (Broker)
||Tel: 01293 517744
|Alex Walters, Cadogan PR
||Tel: 07771 713608
In May 2013, Sefton’s oil production in Kansas increased to approximately 450 barrels a month from 8 wells, compared to approximately 400 barrels a month in both March and April. Additional production is expected from a number of leases in the future as the ongoing programme of workovers and recompletions continues on oil and gas wells (with the emphasis on oil wells).
Additional acreage together with more wells are planned to be obtained through the accelerated leasing programme around the Company’s pipeline system. Alongside the pipeline system for gathering natural gas, TEG MidContinent also has water disposal facilities in place.
Dark Horse acquisition
On 15 November 2012, the Company announced the acquisition of an oil and gas property in Leavenworth County, Northeast Kansas from Dark Horse Operations (“DHO”) for an immediate 42% working interest (“WI”) with the remaining 58% WI being acquired upon title work being completed.
It has now been confirmed that DHO has met all their obligations and clear title is expected within the third quarter 2013. At that time, the Company will acquire the remaining 58% WI for an additional payment of $100,000 to increase its holding to 100% WI. TEG MidContinent is already the registered operator of these assets and this acquisition of the remaining interests will serve to increase reserves.
The DHO Assets consist of a lease with 14 cased wells that the Company is bringing back into operation. A waterflood permit is pending to help improve oil recovery from this property.
Permitting of the new two mile section of pipeline that will join Vanguard to the LAGGS-Southern Star system is almost completed. Ahead of these pipeline being joined the Company is in advanced negotiations with one potential supplier of third party gas. This gas should increase TEG Transmission’s inventory of gas capable of being marketed through its transportation system.
In accordance with the guidelines of the AIM Market of the London Stock Exchange, Jim Ellerton, Chairman of Sefton Resources, Inc. a qualified geologist with over thirty years oil & gas industry experience, is the qualified person as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies, who has reviewed and approved the technical information contained in this announcement. Jim Ellerton has also relied on primary information supplied by staff and third party consultants in carrying out his review.
Sefton Resources is an oil and gas exploitation and production company with significant scope to develop its major areas of interest in onshore United States. Sefton’s business strategy is to acquire long life, partially developed reserves with controlling interests, and maximize shareholder value through asset development using the Company’s own funds initially then involve third party capital, farm-out or merger. At this time, Sefton operates all its assets, the majority of which are 100% owned.
Currently Sefton has a market capitalisation of approximately £3.2 million and a higher PV(10) value for its unrisked proved reserves and unproved resources. The key operational focus at this time is on developing three revenue sources from both California and Kansas:
Enhanced Oil Recovery (EOR) projects in California
Sefton owns 100% of two oil fields in the East Ventura Basin, California - Tapia (heavy gravity oil) and Eureka Canyon (medium gravity oil). The current operational focus is to develop Tapia with an active well drilling and work-over programme in conjunction with the use of cyclic steam production enhancement. Sefton engaged Petrel Robertson Consulting to construct a geologic model to be utilised by Dr Farouq Ali, a recognised expert, in a thermal simulation study to fully optimise production and reserve development of the Tapia field. Tapia generates the majority of Sefton’s revenue at this time and has 2012 year-end estimated Proved Reserves (P1) of 3.5 million barrels.
Natural Gas Transmission in Kansas
Three gas pipelines have been acquired by Sefton in North East Kansas. The LAGGS pipeline in Leavenworth County has been fully refurbished and is now connected to the Southern Star Interstate Pipeline system which allows gathering, transportation and sales of natural gas outside local Kansas markets. Plans are to join the Vanguard pipeline to the LAGGS system (Leavenworth County) which will increase the scale of this gathering system. This means Sefton will be able to transport its own and third party natural gas to a national market and generate additional revenues. A third pipeline in Anderson County is planned to be connected to an interstate pipeline system in the future, which will provide additional opportunities for redevelopment of oil and natural gas.
Exploration and Production in Kansas
In North East Kansas (Forest City Basin), Sefton has a significant and growing acreage position (Leavenworth and Anderson Counties) where conventional oil, gas and coal bed methane (CBM) prospects have been identified. The current operational focus is in Leavenworth County where a workover, recompletion, surface equipment replacement and leasing programme is under way that will see oil, gas and CBM wells brought back into production. Initial revenues are from oil whilst additional gas assets are being assembled for future development as pipelines become operational. Estimated 2012 year-end Proved Reserves (P1) for the Leavenworth portion of our Kansas assets are 82,653 barrels of oil and 2.06 Bcf of gas; and Total unrisked Proved Reserves and Unproved Resources of 832,485 barrels of oil and 14.4 Bcf of gas for the same area.