News and Press Releases
Trading Update
January 25, 2007
Sefton Resources Inc. (the "Company") today
provides a trading update for the
first half of the financial year to 31 December 2006.
The Board anticipates that trading for the Group will be
in line with its expectations, and that it thus continues to trade profitably,
during the second
half of 2006. During this period the Group has utilised its cash flow to
refurbish and renew all its surface equipment at Tapia, provide capital to
evaluate Eureka and continue development opportunities in Kansas.
TEG OIL & GAS USA, INC.
Tapia
Oil production at Tapia remained steady averaging over 4,000
BO/mo with the exception of November when a key well was down for repair for
part of the month.
Early decline rates from initial production of the newer wells have flattened
considerably and the current rates are being sustained. Facilities upgrades
and
repairs continue at Tapia. Once the work has been completed later this year,
it
will be capable of handling an additional 500 barrels of oil a day.
The Company has now received preliminary approval for the
drilling of three additional wells on its Snow USL lease. Permits for 5 wells
(Hartje and Yule
Leases) had previously been received and these can be drilled at any time.
Several rigs are now available once the Company has its financing (See Below)
and permits in place.
In December, the Company commissioned the building of a steam
generator that will initially be used to stimulate production at the Tapia
field. Construction
is expected to be completed and the steam unit operational about mid-year.
Eureka
The reconnaissance geochemical mapping of the Eureka Canyon
field is completed. Preliminary data is encouraging and supports the Board's
plans to develop
further this field. Current production at Eureka is approximated 435 BO/Month.
TEG MIDCONTINENT, INC.
The Board believes that opportunities in Kansas continue
to be extensive.
Anderson/Franklin Counties
A recent project developed to the West of the Company's acreage
holding has encouraged TEG MidContinent to consider a number of options. Sure
Engineering
was contracted to consolidate and expand the available data, and one of its
conclusions was that:
"Net coal thickness of the Company's leases is
11 to 22 ft in Anderson County,
and 13 to 19 ft in Franklin County, exceeding the averages of the Bourbon Arch.
Thicknesses for the Riverton and Bevier coals on TEG acreage are near the maximum
for the region. TEG owns over 30,000 leasehold acres."
Additional work is now being carried out by Sure Engineering
as a result of successful drilling in the vicinity by other companies.
Leavenworth County
At Leavenworth County, TEG MidContinent has continued to
acquire leases in an
area which the Board believes to be very viable. Its total acreage holding
is
now over 7500 acres, acquired at competitive prices. In addition TEG is
currently in contract negotiations with several pipeline operators that provide
gas gathering system infrastructure or market access.
FINANCING
Based on the investment to date and the capital requirement
needed to develop these projects, Sefton Resources, Inc. is continuing to evaluate
options with a
number of entities regarding the possibility of using debt and/or joint venture
arrangements with an industry partner to maximise the potential and minimise
risks.
CAZA LITIGATION
As indicated in the interim results reported September 22,
2006, Caza Drilling Inc., and TEG Oil & Gas U.S.A. Inc., a wholly owned
subsidiary of Sefton Resources, Inc., were parties to two law suits following
the 2002 "blowout" in
Tapia Field. The wrongful death lawsuit relating to the blowout was settled
for $4,200,000 with no liability or costs to Sefton Resources, Inc. or its
subsidiaries. In the lawsuit to claim damages against Caza, an initial ruling
on the litigation went against the Company. Following analysis of the Ruling
and available options, the Parties have agreed to settle the case and have
executed a Settlement Agreement that was agreed to and entered into the Court
records on January 3, 2007. The Settlement Agreement calls for Sefton to
pay $250,000 in exchange for resolution of all matters between the Parties.
The Company's balance sheet includes the contingent liability ($178,000) from
the litigation and as such, there will be no major impact to the Company's
financials.
BOARD AND MANAGEMENT CHANGES
The Board has unanimously agreed that the position of Chairman
and Chief Executive should be divided. As a result Jeremy Delmar-Morgan will
become
Non-executive Chairman with Jim Ellerton continuing as Chief Executive. In
addition Cynthia Campbell, who joined the Group from Accountants, Gordon Hughes & Banks
LLP, has been appointed Group Financial Controller.
31/12/06 AUDIT
The Company is pleased to announce that Chantrey Vellacott
DFK has been engaged as the Company's auditors and we expect results to be
released in April/May of
this year with an annual meeting expected in May/June.
For more information please contact
Jeremy Delmar-Morgan, Chairman
Telephone: 077 8900 4874
Jim Ellerton, CEO
303 759-2700