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Announcement: March 20, 2008
Sefton Resources, Inc., the AIM listed oil and gas production company with assets
in California and Kansas, announces that its wholly owned subsidiary TEG Oil and
Gas USA, Inc. (“TEG USA”) has completed successful drilling at its eleventh
well. TEG USA has now successfully drilled all of the leases, thus extending
production in the entire Tapia field. In addition, TEG USA will initiate a pilot
steam programme on March 20, 2008 on two wells at its Yule Lease. Recent
drilling since November, 2007 has significantly improved cash flow and the four
additional wells should add to this improvement.
Q1 Drilling Programme Complete
TEG USA has successfully completed the Q1 2008 four-well drilling programme at
its Tapia oil field in California. Each of the four step-out wells encountered
greater than 90 feet of oil-saturated Yule sandstone reservoir as follows:
| WELL |
OIL ZONE THICKNESS |
| Snow #3 |
142 feet |
| Snow #4 |
106 feet |
| Snow #5 |
96 feet |
| Lackie #A-4 |
92 feet |
All four wells had excellent mudlog oil shows while drilling, with oil in the
rock cuttings and drilling mud. Wireline logs in all wells displayed resistivity
readings indicative of oil productive sands. These appear equal to, or better
than, TEG USA’s other development wells drilled in the field over the past two
years. These results are particularly exciting since these wells extend TEG
USA’s productive area of the Tapia field, both to the west (Snow wells) and to
the east (Lackie well). Sefton anticipates that the Snow wells will be placed on
production within a week and the Lackie well later, once flow lines and
electrical facilities are extended to this lease. Tank facilities for these
recent wells have recently been completed.
Gas Zones Verified
Natural gas bearing sandstones were identified in all four wells drilled at a
depth of approximately 800 feet. The gas sands encountered were approximately 20
feet in thickness. In the Snow area, these results verify and expand earlier
volumetric mapping of the gas sands that had tested at a rate of over 1,200,000
cubic feet of gas per day in the Snow #1 well in December, 2003. It is this gas
that Sefton is in the process of piping to the steam generator.
The gas sand identified in the Lackie #A-4 well was previously unknown and may
add to the natural gas reserve base. No gas sands had previously been mapped
east of the Hartje #2 well, which is located approximately 700 feet west of the
recently drilled Lackie #A-4 well.
Additionally, an offset operator’s well, the J.L. Brandon #2 well, encountered
gas at a similar depth as indicated on the mudlog when the well was drilled in
mid-January, 2008. TEG USA does not have copies of the Brandon well data, but
hopes to obtain copies when they are made public in approximately 60 to 90 days.
This well is located approximately 800 feet north of the Lackie #A-4 well.
Increased Water Handling Ability
TEG USA has completed the realignment of the produced water processing facilities
at the Tapia Field. The improvements have effectively doubled the amount of
produced water that can be processed at Tapia. Included in the realignment was:
- Reworking/acidizing the Hartje #8 injection well and returning it to injection
for use along with the Hartje #9 injection well.
- Adding a produced water tank at the Yule Tank facility.
- Adding a produced water tank at the Hartje tank facility.
- Installing two new produced water transfer pumps.
- Increasing the size of the produce water piping at the Yule and Hartje
facilities to handle high flow volumes.
- Relocating the injection pump and installing a backup pump at a more efficient
location near the Hartje tank facility.
- Installing new injection pipelines from the injection pumps to the Hartje #8 and
#9 injection wells.
- Old water tanks for the Tapia field will be removed in the coming weeks.
This improvement should allow TEG USA to seamlessly add new wells to the
production stream and allow for increased water production spikes due to cyclic
steaming of the wells.
Cyclic Steaming
The 14 million BTU Steam Generator has been surface tested and tuned for the use
of propane as a temporary fuel. The testing of the steam generator by venting
steam at the surface was very impressive and exciting. The generator was
operated at 100% output design capacity during the testing. During the test the
nitrous oxide emissions recorded were 10ppm, well under the limits of the air
permit. Sefton has received the final permit for the propane tank from the LA
Air Quality Management District (AQMD). The steam generator is now capable of
running on both propane and natural gas. Sefton is in the process of laying a
gas supply from the Snow #1 gas well to the steam generator so both propane and
its own leased natural gas can be used at the Company’s option. The Yule #7 well
has been prepared for steam injection which will commence on Thursday, March 20,
2008.
Further Development
Now that all leases have been drilled and steam testing will yield results
shortly, a comprehensive follow-up drilling and steaming development plan can be
formulated for implementation this year through the next several years.
Commenting, Jim Ellerton, CEO, said:
“We are extremely pleased that, with successful drilling results at Tapia and
improved cash flow, Sefton and its subsidiaries are now in the position of being
able to be flexible in deciding how to:
Complete the full development of Tapia Field Further develop Eureka Canyon
Field, and Initiate a pilot drilling programme within its Kansas CBM acreage.”