• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Energas Provides Update to Shareholders on Parkway Project; Four Wells Producing and Hooked Up to Pipeline

Posted on: Tuesday, 16 May 2006, 18:08 CDT

Energas Resources, Inc. (OTCBB:EGSR) today announced that it has completed the connection of the first four wells in the Parkway Project to its recently completed pipeline and that after a period of consistent operation is revising estimates on the production. The company noted that although there have been several challenges that have caused delays on the project, many of these have been resolved and the company intends to continue to add the remaining wells to the pipeline. The company did state that it anticipates that the time frame for significant revenue from the project will be longer than initially expected as a result of some of these challenges.

According to the company, to date the four connected wells have produced some 340 barrels of oil and an initial 3 to 4 million cubic feet of gas is in the pipeline, which stays in the pipeline to maintain pressure to meet sales line pressure. The company commenced feeding the gas through the pipeline, but minimum levels have not been able to be maintained at the present time as the initial four wells, which came on stream at extremely high mcf's have settled down to an average mcf of 16 per well. As a result, gas is not currently moving through the pipeline at a rate previously anticipated.

The four wells currently on line are estimated to produce net revenue to the company of $9,700 per month (based on a gas price of $6). The oil component to the wells is estimated to generate a net revenue of approximately $7,000 per month to the company (using a $50 per barrel oil price). The company notes that these estimates are significantly less than had previously been expected. (The formula for computing these estimates is # of wells (4) x mcf (16) x price of gas ($6) x .85 (avg. percentage of revenue kept by Energas) x 30 days per month; for oil, the formula is # of wells (only 3 wells are drilled to oil zone) x barrels per day x price of oil ($50) x .85 x 30 days per month).

Energas remains committed to the Parkway project. The company spent approximately $600,000 in constructing the recently completed pipeline to move gas from the wells that it currently leases. Although the vertical wells are not producing as expected, engineering studies show the possibility of significant reserves of oil and gas in place and the company is currently evaluating the viability of other methods to increase production. These other methods could include opening gas zones behind pipe, fracture treatments of producing zones, drilling new wells and possibly drilling horizontal wells in connection with the hook-up of the remaining wells to the pipeline.

Safe Harbor Statement

When used in this press release, the words "intends,""believes,""anticipated" and "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. Factors that could cause or contribute to such differences include normal risks associated with oil and gas drilling activities. In addition, adverse weather conditions can hinder or delay operations, as can shortages of equipment and materials or unavailability of drilling, completion, and/or work-over rigs. Even though a well is completed and is found to be productive, water and/or other substances may be encountered in the well, which may impair or prevent production or marketing of oil or gas from the well.

Source: Business Wire

More News in this Category