Sefton Resources, Inc. : Operational Update
News and Press Releases
07/11/2012| 06:41pm US/Eastern
11 July 2012
Oil in California
Sefton Resources, Inc. (AIM: SER), the independent oil and
gas exploitation and production company with interests in
California and Kansas is pleased to announce an update on its
Oil & Gas in Kansas
Oil production is averaging 170 barrels per day and is on a
rising trend as the programme of well workovers and
associated cyclical steaming continues with production
peaking at over 200 barrels of oil per day.
A service rig remains on site and the current programme of
well workers and cyclic steaming is expected to lead to
further increases in production.
Steaming continues to produce elevated results from certain
wells ranging from 200% to 300% times their baseline
Dr Ali report on simulation studies on the steam flood
computer model of the Tapia oil field expected before the
end of the summer.
California Division of Oil Gas and Geothermal Resources
award for excellence received for the fourth consecutive
Joint construction of the LAGGS-Southern Star Interconnect
is now in progress. Southern Star project management
timeline shows an estimated completion and activation date
in September 2012; but Sefton is trying to accelerate all
construction items under its control, so that the LAGGS
pipeline becomes operational as soon as possible
The Company has identified 23 potential recompletion oil
and gas wells in the proximity to the LAGGS pipeline.
Development of the oil wells will be prioritised so as to
deliver first revenue from Kansas.
Further wells are being added as leases are acquired and
brought into play by the joining of the Vanguard pipeline
to the LAGGS-Southern Star system which is timetabled for
completion by the year-end.
Jim Ellerton, Chairman of the Board, said: "Sefton is
entering a period of substantial news flow as a number of the
Company's projects are now reaching a critical stage in their
development which will see the Group become a far larger
business and turn the value that has been created into
We continue to receive a premium to Nymex for our heavy oil
in California and the gas price has rebounded strongly with
the twelve month future strip price now at the $3.30 level.
Certainly futures prices support our positive view for oil
and gas prices over the next twelve months as we begin to
ramp up production both in our operations in California and
Kansas in order to drive revenue significantly higher and
greatly improve profitability
Looking ahead, in the next few months, we expect to announce
the results of the Dr Farouq Ali's steam flood report on
Tapia, Southern Star Interconnect being completed, first oil
revenues from Kansas, updated Competent Persons Reports on
both California and Kansas, interim results and further
For further information please visit www.seftonresources.com
Oil in California
Sefton Resources, Inc.
Jim Ellerton, Chairman
Dr Michael Green, Investor Relations
Tel: +1 (303) 759 2700
Tel: 020 7448 5111
Fox-Davies Capital Limited
Barry Saint (nominated adviser)
Daniel Fox-Davies/Richard Hail (joint broker)
Tel: 020 3463 5010
Dowgate Capital Stockbrokers (joint broker)
Tel: 01293 517 744
Tel: 07771 713 608
Although production was less than expected in June due to
necessary maintenance work, by the end of the month Sefton
had brought back on production the Hartje #12 well (after
steaming) along with the Hartje #14 and #17 wells following
workovers. Production now averages 170 barrels of oil per day
(bopd) and has been on a rising trend with production peaking
in excess of 200 bopd. The service rig remains on site and
the current programme is expected to lead to further increase
in production beyond the Company's targeted 200 bopd.
Currently the price received is $92.70 per barrel (a 7%
premium to Nymex prices).
The Company completed the steaming the Yule #7 well in late
June and the well has just returned to production. The next
two wells to be steamed are Yule #9 and Yule #12 which were
drilled in late-2011 but suffered from formation damage by
the drilling mud. These two wells will be steamed following
the completion of an acid injection/stimulation programme.
Next in line for steaming are the Yule #10 and Yule #11.
Results following steaming continue to demonstrate two to
three times elevated levels of production.
Full steam flood report
All the analysis on the Yule #12 and Hartje #19 cores has now
been received and the geologic model of the Tapia field by
Petrel Robertson is now completed. Dr. Ali is currently
making the final steam flood computer model runs and we now
expect the final steam flood report before the end of the
summer. The report is a necessary next step in the planning
design of the exact steam development pattern, well spacing,
and steam facilities sizing from which the detailed capital
requirements can be formulated with accuracy. The delays in
completing this study have been frustrating, however,
accuracy is more important than speed in a project as
significant as this.
Drilling activity in the area has been increasing with
Vintage Production/Occidental drilling a total of four wells
at Wayside Canyon which lies adjacent to Tapia. The DOGGR has
reported April production for the Wayside Canyon of just
under 270 bopd for the field. Prior to drilling the four
horizontal wells this past year, the field averaged just
under 30 bopd. The production curve for the first of these
horizontal wells (WCU#56H) drilled one year ago shows a steep
front-end decline that is typical of a horizontal well in a
The Board expects to start drilling wells on its Eureka
Canyon oil field in 2013. This property comprises of more
than 1,500 acres of minerals leasehold and is located in
Ventura County. The oil field was discovered in 1893
following the discovery of the neighbouring Torrey Canyon
Field where Vintage Production/Occidental's recent Torrey#111
well was drilled to a depth of just over 11,000 feet. Initial
production of 182 bopd has been reported with 79 bopd
produced in April, after four months of being on production.
Vintage has followed this up by drilling the Torrey#112 well
where production data has yet to be announced; and it has
permits to drill thee more wells in this field.
Oil and Gas in Kansas
Sefton is proud to report that its Californian subsidiary has
received an award from the California Division of Oil Gas and
Geothermal Resources (DOGGR) for the excellence of the Tapia
Field Operations. This is the fourth year in succession that
we have won this award. In 2012, the judging was more
stringent and a total of only four operators received such
awards. In fact, this year the competition was between
Operators on a state-wide basis, rather than within the 6
geographic divisions. The announcement was made later than
previous year, because of the additional scrutiny involved at
the State level.
Southern Star interconnect
Joint construction of the Southern Star Meter Run and
Interconnect is now in progress. The Southern Star project
management timeline shows an estimated completion and
activation date in September 2012. Sefton is attempting to
accelerate all construction items under its control where
possible, to work on items parallel with Southern Star so as
to accelerate project completion, and thus the date in which
the LAGGS pipeline becomes operational.
The Company is enlarging its footprint in Kansas with a lease
acquisition programme that is being accelerated by the funds
raised in the recent placing. A total of 23 potential
recompletion oil and gas wells have been identified in the
proximity to the LAGGS pipeline including 12 oil wells. Our
consultants are currently evaluating well logs of the
acquired wells in order to prioritize the recompletion
Priority is being given to oil wells which are capable of
providing the first revenues. At the moment, our team is
carrying out remedial work on these leases so that the oil
wells can be brought into production and this includes
installing new tanks, lease clean-up, repairing access roads,
general roustabout work, reconnecting the electrical supply
and replacing electric motors and pumps.
Joining LAGGS and Vanguard pipelines
Work on the Vanguard pipeline is nearly completed and will be
followed by certification. The Vanguard pipeline lies 2.5
kilometres away from the LAGGS-Southern Star system and is
scheduled to be joined before the year-end. Ahead of that
time, further existing wells will accumulated as more leases
are acquired. Sefton has commenced discussions with suppliers
of third party gas which the Vanguard pipeline would allow to
get to market.
Expansion of the pipeline system
Sefton has well advanced plans to further extend its gas
pipeline infrastructure to support the expansion of its oil
and gas production in Kansas. Additional potential pipeline
development projects include:
Repairing and re-activating the Vanguard sales line into
the Southern Star storage area (southwest of the LAGGS/S.
Reactivation of the Waverly facility and pipeline system in
Anderson County between the end of 2012 and mid 2013.
Sefton Resources is an AIM-listed oil and gas exploration and
production company with tremendous scope to grow within its
100%-owned and operated assets in the US. The business
strategy is to acquire long life, controlling interests,
partially developed reserves and add value using our own
funds and then maximise shareholder value through asset
development involving third party capital, farm-out or
merger. Currently the Company has a market capitalisation of
approximately £10 million even though independent experts
have calculated a Present Value of $278 million
(approximately £173 million) for the assets (as at 31.12.11).
The board is in the midst of turning this created value into
profits by accelerating the development of the assets within
its three subsidiaries.
Oil in California - In East Ventura, the Company owns 100% of
two oil fields, Tapia Canyon (heavy gravity oil) and Eureka
Canyon (medium gravity oil). Estimated 2011 year-end proved
reserves stood at 3.8 million barrels. The focus is on Tapia
Canyon where Sefton drilled additional wells in 4Q 2011, to
increase production and also investigate the use of steam to
improve recovery and reserves. The Company has engaged Dr
Farouq Ali to advise on a full steam flood development of the
Tapia field and the report is expected shortly.
Pipeline systems in Kansas - Three pipelines have been
acquired. The two pipelines in Leavenworth County have been
refurbished and are in the process of being connected to the
Southern Star Interstate Pipeline that will allow the Company
to flow gas in due course. Following the completion of the
Southern Star interconnect, the priority will be joining the
LAGGS and the Vanguard pipelines thereby increasing equity
and third party gas into the system. The third pipeline
(Waverley) is in Anderson County where the plan is to test,
fix and certify this pipeline ahead of negotiating contracts
to connect to an interstate system. This move is expected to
provide additional redevelopment of oil, equity and third
party gas opportunities.
Oil & Gas in Kansas - In East Kansas, Sefton has over 45,000
acres in the Forest City Basin, where Coal Bed Methane (CBM),
as well as conventional oil and gas deposits are targets. A
planned recompletion program will see oil, gas and CBM wells
brought back into production and the leasing program is being
accelerated with the plan to double the Company's acreage in
Kansas. In the near term the focus will be on oil revenue
while gas opportunities are accumulated as part of this
accelerated leasing program.