News and Press Releases
Operations Update
January 14,
2008
Sefton Resources Inc, the AIM listed oil and gas production
company with assets in California and Kansas announces that significant progress
was achieved during
the final quarter of the year despite the fires that caused havoc in California.
TEG Oil and Gas USA, Inc. ("TEG USA")
Production
from Sefton's wholly owned subsidiary TEG USA averaged 193 BOPD during the
month of December, 2007, thus finishing the year with a strong
production increase at the Tapia Field in California. This increase was due
to
the excellent results from the two-well drilling programme completed in late
November. The two wells, Hartje#16 and Hartje#17 had combined 30 day average
initial production rates of 78 BOPD. This increase in oil production, combined
with record oil prices, has resulted in a significant improvement in cash flow.
TEG USA plans to follow up these drillings with a three-to-four
well drilling programme beginning in February. These planned wells will be
similar in scope to
the previous wells. TEG USA entered into a drilling contract with Kenai Drilling
on January 8, 2008 to perform this work.
As previously announced, TEG USA is moving forward with its
steam pilot testing of the Yule #7 and Yule #10 wells, also at the Tapia Field,
using propane gas as
fuel. The change in source fuel was made after mechanical issues were identified
in one of TEG USA's gas source wells. Despite having other gas wells available
for use, TEG USA believes the decision to use propane is sound because it can
test the viability of steam stimulation without excess well repair expenditures
and utilize available monies on the drilling of new oil wells; it can also
expedite the programme without constructing a gas supply line from the
neighbouring lease where other gas wells are located.
Constructing gas supply lines and determining what wells
will provide gas for a
steam programme can be designed once the steam pilot results have been
evaluated.
At TEG USA's Eureka Canyon oil field the reconnaissance survey
was completed and
an infill exploratory geochemical survey is planned during 2008.
TEG MidContinent, Inc. ("TEG MidContinent")
TEG MidContinent moved cautiously during 2007, responding
to the varied results achieved by industry operators in the Forest City Basin
in Kansas. It has
selectively focused on prime acreage in its lease acquisition programme and
undertaken geological and engineering studies.
During the year TEG MidContinent acquired an additional 5,000
acres and now its
Anderson and Franklin County project is comprised of approximately 36,000 acres.
The additional acreage has close proximity to pipelines and is supported by
extensive geology, including detailed coal maps. The acreage is situated such
that TEG MidContinent has coverage on both conventional oil and gas
possibilities and on the thicker, potentially more productive, Bevier and
Riverton coal deposits. In addition TEG MidContinent's acreage position in
Leavenworth County is now 7,000 acres, which also provides excellent potential
for both conventional and unconventional gas plays.
TEG MidContinent has contracted for design of a "pilot
drilling programme" that
is expected be implemented during 2008. Discussions continue with a number
of
potential joint venture partners which would allow TEG MidContinent to expand
the planned drilling programme.
Other Matters
Sefton also announces that
a former director, Karl Arleth, has elected to convert a loan note of $39,310
into 330,827 shares of the Company at an exercise
price of £0.06 per share. These shares will be admitted to trading on
AIM on 17
January, 2008.
Chairman, Jeremy Delmar-Morgan, commented:
'We finished the year in good form, despite the late arrival of the drill rig
and the Californian fires which meant that it was not until December that we
could see the rewards from the start of our drilling programme. The pilot
steaming programme continues with the use of propane gas. We decided to follow
this route so that we can quickly attain the data we need to determine the
most
effective way of increasing production from existing and future wells. In
addition this should improve reserves, as well as cash flow. With the $10m
line
of credit available for our development programmes, we start 2008 in an
excellent position to exploit all the ground work that has been put in place
during the last two years.
For further information, contact:
Jeremy Delmar-Morgan, Chairman Tel: 077 8900 4874
John James (Jim) Ellerton, CEO Tel: 00 1 303 759 2700
David Millham, Investor Relations Tel: 020 7796 9999
Nicola Marrin, Seymour Pierce Limited Tel: 020 7107 8000
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 it 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.