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Northcote (LSE:NCT), an onshore US oil and gas exploration and production company, has announced that it has acquired a 100% Working Interest (‘WI’) in the East Blackwell Unit (‘East Blackwell’) in Kay County, Oklahoma.
Concurrently, the Company has agreed terms for the farm-out of a 20% interest in East Blackwell, in line with its strategy to significantly increase future production and reserves while at all times actively managing development costs and risk.
– Northcote’s net US oil and gas acreage is now over 6,058 including 4,496 net acres in Oklahoma and over 1,562 in Texas a 1300% increase from 462 net acres at IPO
– Acquired 100% working interest (75% Net Revenue Interest) in 520 gross acres for total cash consideration of US$120,000 – includes five new drilling locations
– Agreed farm-out terms where a third party will earn a 20% WI (15% NRI) in East Blackwell for a total consideration of US$75,000 – effectively funding Northcote’s initial share of first phase development costs
– Acreage held by production giving discretion as to when work is performed
– East Blackwell’s strength exists in its future development upside:
– Near term – field initiatives to improve production and operating efficiency
– Mid term – new well targeting the lower skinner sands
– Longer term – Enhanced Oil Recovery campaigns on existing and new wells
Northcote’s Chief Executive Officer Randall Connally said “The East Blackwell Skinner Sand Unit acquisition is an extension of our activities in and around Osage County, Oklahoma and will be added to the portfolio of properties operated by Northcote. The speed and terms of the agreed farm-out, in our view, provide third party confirmation of the potential of East Blackwell which is held by production thereby allowing us to schedule development to best suit our resources. The addition of up to five new drilling locations in a field that has averaged about 39,000 barrels of oil per well from shallow wells that can be drilled and completed for approximately US$500,000 each fits our objective of adding low cost, oily upside for Northcote shareholders.”
East Blackwell:
Northcote Energy Limited is pleased to announce the acquisition of the East Blackwell Skinner Sand Unit in Kay County, Oklahoma for US$120,000. After Farm-out Northcote’s interest in the East Blackwell Skinner Sand Unit includes 520 gross acres with an 80% WI (60% NRI) that are held by production from two wells.
The East Blackwell Skinner Sand Unit has historically produced approximately 391,000 cumulative barrels from 10 productive wells to date. The field currently produces a stable 3 barrels per day from 2 wells.
Northcote intends to drill and complete up to five additional wells targeting the upper and lower Skinner Sands and the unit has excellent longer term potential as a waterflood. The funding of these future wells is at the Company’s discretion and any investment will be subject to partnering or the availability of non-dilutive capital. The unit is held by production and, therefore, the work programme is at Northcote’s discretion. In the near term Northcote will take steps to increase production rates from the two producing wells and improve the efficiency of the water disposal system to support longer term development drilling. Northcote will serve as operator of the unit and the Company looks forward to providing shareholders with an update as work commences at East Blackwell.
The company has concurrently agreed the terms of a farm-out of a 20% WI and 15% NRI in East Blackwell for a total consideration of US$75,000. This is comprised of US$60,000 with regards to the lease acquisition and a further US$15,000 towards Northcote’s share of costs associated with the first development phase, which comprises field initiatives to improve production and operating efficiency.
