Forty Acres Energy Commences Development of West Eumont Unit Waterflood
HOUSTON--(BUSINESS WIRE)--Aug 3, 2018--Forty Acres Energy, LLC (“Forty Acres” or the “Company”), a private oil and gas company based in Houston, Texas, is pleased to announce that it has commenced development of the West Eumont Unit waterflood (the “Unit”) in the Permian Basin. Following the successful formation of the 7,977 acre unit effective June 1, 2018, Forty Acres operates the Unit with a 95.6% working interest. Additionally, the Company has acquired existing water handling infrastructure within the Unit and entered into a third-party agreement to secure ample water supply for its injection needs. In July 2018, Forty Acres began injection operations and officially commenced development of the waterflood.
The West Eumont Unit is a Yates, Seven Rivers, and Queen (“Y-SR-Q”) waterflood unit located in Lea County, New Mexico. Based on primary production and expected secondary recovery, the Unit is the largest waterflood unit ever formed in southeastern New Mexico, a region where the Y-SR-Q reservoirs have produced over 600 million barrels of oil to date. Forty Acres will develop the Unit through a significant inventory of low-risk primary and secondary waterflood projects. Based on the consistently strong waterflood performance of the dozens of directly analogous Y-SR-Q waterfloods along the western edge of the Central Basin Platform, the Company estimates future recoverable reserves from the Unit of 20-30 million barrels of oil in addition to its 10 million barrels already produced, representing 25%-33% total recovery of the Unit’s estimated original-oil-in-place of 120 million barrels.
Forty Acres recently established development of its first waterflood pilot area, consisting of several existing producers and five new drill wells. The new drill wells consist of one producer and four injectors drilled to a total depth of ~4,500’ at an average cost of approximately $500 thousand per well. The producer is expected to pay out in 8 months and ultimately recover approximately 150,000 barrels of oil equivalent. Each of the four injectors is injecting water at 400-500 barrels of water per day. Forty Acres will develop several additional pilot areas similarly in the near term. Full field development of the Unit will consist of up to 400 wells and require approximately $100 million of total capital, resulting in estimated peak production of 7,000-8,000 barrels of oil equivalent per day.
“Forty Acres has assembled a large, strategic waterflood unit along with critical infrastructure in an area with significant primary and secondary development opportunity,” said Forty Acres Chief Executive Officer Huxley Song. “We are excited to reach the important milestone of commencing waterflood operations in our initial pilot area and look forward to developing several more areas and growing production meaningfully in the near term. We appreciate the continued financial and strategic support of our financial sponsor, Sage Road Capital, and look forward to the future growth of our partnership.”
John Crum, Forty Acres’ Non-Executive Chairman, said, “The West Eumont Unit is located in one of the most prolific oil producing regions in the world. I’m proud of the team’s hard work in identifying and evaluating the favorable technical and economic merits of the Unit, executing on numerous acquisitions to achieve its current scale, and completing the unitization process and commencement of waterflood operations in a timely manner. I look forward to Forty Acres’ continued success as it embarks on the further development of its asset base.”
About Forty Acres Energy, LLC
Forty Acres Energy is a Houston, Texas based exploration and production company focused on the acquisition and development of conventional oil reserves, including the implementation of enhanced-recovery techniques. The Company was formed in 2015 by Huxley Song, John Crum, Chris Fling and Sage Road Capital.
About Sage Road Capital
Sage Road Capital is a Houston, Texas based private equity investor in the upstream oil and gas sector. Founded in 2012, Sage Road targets lower middle-market investment opportunities in North America, with a primary regional focus on Texas, Oklahoma and the surrounding states. For more information, please visit www.sageroadcapital.com.
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CONTACT: Forty Acres Energy, LLC
Huxley Song, 832-706-0049
KEYWORD: UNITED STATES NORTH AMERICA NEW MEXICO TEXAS
INDUSTRY KEYWORD: ENERGY OIL/GAS PROFESSIONAL SERVICES FINANCE
SOURCE: Forty Acres Energy, LLC
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PUB: 08/03/2018 08:30 AM/DISC: 08/03/2018 08:31 AM