News and Press Releases
Operations Report: June 13, 2008
June 18, 2008
Sefton Resources Inc., the AIM listed oil and gas production company with
assets in California and Kansas, announces an update through its wholly owned
subsidiary TEG Oil and Gas Inc. (TEG) regarding the Tapia 2008 Q1 Drilling and
Pilot Steam Programme.
TAPIA FIELD
Cyclic Steaming Pilot Programme.
The Yule #7 well has been on production since late April, 2008 following a one
week steam and a three week thermal soak cycle as part of the Pilot Steam
Programme. The results thus far are encouraging. The well prior to steam
injection was producing at an average rate of approximately 15 BOPD. The well
has since been producing at a rate of 15-25 BOPD, an increase in oil production.
A larger pump capable of producing greater fluid volumes was installed on 6 June
2008 and this is now being monitored to see if there will be further improvement
in oil production.
Steam injection has been completed on The Yule #10 well and it is currently in a
two week "soak" period.
The well was steamed for one day using lease gas from the Snow #1 well to fire
the steam generator. Subsequently, fine-grained sand produced with the gas
forced a shut-in of the well after the first day of steaming. After working on
the well for a few days, it was decided to finish the Pilot study with propane.
The mechanical problems encountered with gas production from the Snow#1 and
Yule#8 wells as a source of fuel for the steam generator were not unusual and
require further engineering work to utilise lease gas for steaming. The Board
remains confident that the gas in this shallow reservoir can be used effectively
as fuel for the generator.
Evaluation of Yule#7 and Yule#10 test results will provide the necessary data
for the planning of a standard steam injection programme for the field going
forward. Results From Wells Recently Drilled.
Total May, 2008 Tapia production was 5588 BO and total Eureka production was 238
BO for a combined total of 5826 BO or 188 BOPD. The cash flow from our
production stream will be greater than $500,000 for this month and the
anticipated continuation of this level of cash flow will support the ongoing
development programme of the company's assets.
The three Snow wells #3, #4 and #5 are now producing into the rebuilt
Lackie/Snow Tank Facility that previously only handled production from the
Lackie Lease. The wells began producing on May 1, 2008. The one month delay was
the result of the electricity company being unable to provide electrical service
to the Snow lease. The wells have good to excellent oil cuts ranging from 30% to
80% of the total fluid produced. These oil cuts correspond to the well log
readings taken at the time the wells were drilled. The total fluid produced from
the wells thus far has been low, however. The reasons for the above, are a
combination of; 1) Mechanical pump problems; 2) Significant gas interference
with the pumps; 3) Mud contamination due to the delay in start of production; 4)
Formation damage during drilling and completion; 5) Cement contamination during
installation of casing; and 6) Lower permeability formation properties.
An acid stimulation was implemented in the past week on one of the wells to
address symptoms due to items 3 through to 6 above. The other two wells will be
treated in a similar manner, when the results are analysed. Additionally, all
three wells have had the downhole pumps changed out. The pump shoe on Snow #4
showed a manufacturing defect that would limit the pump's efficiency.
The Lackie #A-4 well began production in mid-April, 2008. The well encountered a
down-dropped fault block on the eastern plunge of the Tapia Field. It produced
an average of 10.4 BOPD and101.9 BWPD in the month of April. The percentage of
water in the production stream for this well is higher than expected, however it
is believed that steaming the well will improve the productive rate in a similar
manner to Yule #7.
The four new wells are all step-out wells and not the infill wells that have
been drilled previously. Despite oil production rates not being what we have
come to expect from newly drilled well in this field, the oil cuts as mentioned
are good. This indicates that the development plan for this field is correct.
EUREKA CANYON FIELD
Geochemical Survey Planning
TEG has been working with W.L. Gore, Inc. to undertake a geochemical sampling
plan for the follow-up survey in Eureka Canyon. The original reconnaissance
survey showed very encouraging exploratory potential on the eastern half of the
1500 minerals acres held by TEG. The follow-up infill survey is being designed
to investigate in more detail the areas that displayed an elevated geochemical
signature. TEG anticipates initiating data collection in the field in September,
2008.
TEG is currently working-over the Eureka wells to increase field-wide production
levels. The work includes sand clean outs and pump, rod and tubing changes as
necessary. Production in the field had declined to approximately 7 BOPD. We
anticipate the work will increase the oil production by a factor of 2.5 to 3
times. These wells have not been serviced in nearly two years. Fine silt and
sand gradually choke off production in the wells over time and require this type
of maintenance.
Enquiries:
Jeremy Delmar-Morgan, Chairman, Tel: 077 8900 4874
John James (Jim) Ellerton, CEO, Tel: 00 1 303 759 2700
David Millham, Investor Relations, Tel: 078 5094 9324
Jonathan Wright, Seymour Pierce Ltd., Tel: 020 7107 8000
Note: The information in this release has been compiled and reviewed by Harry
Barnum, a director of Sefton, who is a qualified person for the purposes of the
AIM Guidance Note for Mining, Oil and Gas companies. Mr. Barnum has bachelors
and Masters Degrees in Geology and over 20 years of experience in the oil and
gas industry. He is a registered professional geologist in the State of
California. Sefton Resources is an AIM listed oil and gas production company.
Its main core area of activity is in the East Ventura Basin in California, where
is owns 100% of two oil fields, Tapia Canyon (heavy gravity oil) and Eureka
Canyon (medium gravity oil), both of which have over twenty years of expected
production life. In addition, Sefton has over 40,000 acres in the Forest City
Basin of Eastern Kansas where Coal Bed Methane gas, as well as conventional oil
and gas deposits, are targets.