• Entek to acquire 55% interest in the Slater Dome and Focus Ranch acreage and associated infrastructure owned by New Frontier Energy Inc (NFEI) in Colorado and Wyoming, USA oil and gas interests with expenditure of up to US$13.6 million. Entek will also provide convertible note funding of US$1.0 million to NFEI.
• Slater Dome field already in production and currently averaging 1.1 MMCFD, with proven reserves of 15.3 BCF and 2P reserves of 35.2 BCF.
• Proven 2P Reserves in the Focus Ranch Unit is 2.258 million barrels of oil and condensate and 7.592 BCF of natural gas, where up to 800 MCFPD of gas and over 100 BOPD have been produced on test, with two existing wellbores ready for production.
• The farm in agreement includes significant existing newly installed infrastructure associated with the leased acreage, conservatively valued at US$5.5 million.
• The farm-in entitles Entek to conduct a work program to enhance existing production and to develop proven CBM, and conventional and continuous oil and gas reserves within the leased areas and to conduct exploration for new CBM, conventional and continuous oil and gas reserves across the AMI, of which approx 70,000 acres are already leased.
Entek Energy Limited has completed a conditional agreement with Colorado-based New Frontier Energy Inc. (NFEI) to earn up to a 55% interest in NFEI’s large exploration and production portfolio in the United States which includes significant production assets and exploration leases located within a highly prospective and expansive area in Colorado and Wyoming, USA.
The farm-in by Entek will be achieved by funding up to a total of US$13.6 million joint operations over a notional 4 year period with expenditure committed directly to increase production and reserves. The offer has been accepted by NFEI and is subject to Entek’s due diligence, Board approval and agreement by the parties of final documentation. Entek has the right to assume Operatorship when the interest earned by Entek exceeds the interest of NFEI.
Entek’s Chief Executive Officer Russell Brimage said:
“The farm-in agreement earns Entek a significant interest in production, certified reserves, infrastructure and exploration leases, and represents a significant step forward in the development of our US oil and gas business. The agreement enables Entek to add long life reserves to its existing high productivity Outer Continental Shelf reserves in the Gulf of Mexico, effectively doubling its reserve base from 20 BCFE 2P Reserves, held within its High Island 24 Field and Main Pass 252 block in the Gulf of Mexico, to around 43 BCFE 2P Reserves.”
Within the agreement, Entek and NFEI have agreed an Area of Mutual Interest (AMI) covering a significant portion of the Greater Green River Basin (Colorado and Wyoming, USA), regarded by Entek as highly prospective for further exploration success in both coal bed methane, conventional and continuous oil and gas resources, with the potential to offer very long life reserves when proven commercial.
COMPANY STRATEGY
Entek’s core area of business has been the Outer Continental Shelf waters of the Gulf of Mexico (GoM). Reserves within this region are generally high return, high rate projects (typically 3-5 years). The farm-in to the acreage of NFEI provides Entek the opportunity to develop a significant long life reserve to underpin the, high rate, high return reserves the company will continue to accumulate in the GoM.
The NFEI farm-in meets Entek’s strategic requirements with respect to risk. The NFEI acreage is low risk, the Slater Dome CBM Field is in production with newly installed pipelines, processing and compression facilities. The challenge is to develop a sound exploitation strategy to maximize recovery and grow the certified reserves, while imposing effective and efficient production practices.
The Focus Ranch Unit has two wells drilled (12-1 and 3-1) both of which encountered oil and gas, and produced on test (12-1). Entek proposes to further evaluate both wells in the first stage of the farm-in work program, and if results justify, these wells will be put on line to production. Both the Slater Dome CBM Field and the Focus Ranch Unit have considerable upside potential to grow a significant long life (20 years plus) reserve portfolio.