Wolfberry Project
The Wolfberry play, originally named because of the commingling of production from the Wolfcamp and Spraberry Formations, is a major low-permeability oil play in the Permian Basin. Located principally in western Texas, the Permian Basin is one of the most prolific oil-producing basins in North America. The largest accumulation of oil and gas reserves in the Permian Basin is found in the Spraberry trend, which cover large parts of six counties and has a total area of approximately 2,500 square miles. The Spraberry trend is ranked third in the United States by total proved reserves and seventh in total production.
The Wolfcamp, stratigraphically below the Spraberry, is itself a significant producer in the Permian Basin. It is equally well known for its low permeability in most areas in the basin. Advancements in completion methods have made it possible to combine production from the Spraberry and Wolfcamp zones in areas that were previously uneconomic on a standalone basis, achieving robust economic results. The play has continued to evolve to include additional zones below the Wolfcamp; now, Wolfberry refers to any well with commingled production from the Mississippian through the Spraberry.
Completions in the Wolfberry are generally anticipated from a 2,500 to 3,000 foot gross interval, and located between 7,000 and 10,500 feet, drilling depth. Completions begin at the bottommost formation, and can include up to 8 to 12 fracture stimulations.
Several senior oil and gas producers such as Concho Resources, St. Mary Land and Exploration, Pioneer Natural Resources, Oxy USA , ExL Petroleum, Mariner Energy, and Cambrian Management, are actively developing the Wolfberry. Nearly 2,000 wells have been drilled since the beginning of the play in late 2007.
In October 2009, Lynden entered into a Participation Agreement to acquire an interest in oil and gas leases covering approximately 13,300 gross acres in Glasscock, Howard, Martin, Midland, and Sterling counties with the Wolfberry as the primary objective.
The leases are contained within five prospect areas around which five areas of mutual interest ("AMI") have been established.
We will receive 43.75% of the vendor's interest which ranges from 50% to 100% in the leases by paying 50% of the drilling and completion costs attributable to the vendor's interest, and by paying for the first US $2 million spent in connection with any new leases or extensions of existing leases on lands located within the AMIs.
Infrastructure
The Permian Basin has been the site of commercial production since the 1920's and because of this, there already exists extensive pipeline infrastructure with available capacity. It is expected that the tie-in of wells drilled will be quick and relatively inexpensive.