Latest News – From Jake Stewart
News update: here is another important report from Dr. Myron Kuhlman. We didn’t get this earlier ‘Franklin & Parker Lease’ report during the exchange of documents after the sale, or from manager, Kevin Doty until this week…and you can definitely use this additional report to see how Dr. Kuhlman describes, and more fully explains the North Stone Bluff project.
Production has doubled on the NSB leases since our last field update a week ago…so it looks like the engineering has been correct. We will continue to work to increase the production from the water & gas injection/water flood (WAG) operation in place on the 800 acre, four lease North Stone Bluff Field.
Jake Stewart told me the lease ‘assignments’ have been prepared by our oil & gas attorney Don Henson for the first 25% working interest ownership being conveyed from C & J Exploration in the North Stone Bluff Leases (NSB) to TOG. We will be paying approximately $62,500 in Joint Interest Billing (JIB) charges submitted for our share of the cost of two new wells just drilled by our co-partner C & J Exploration, and I agreed to forward the Joint Interest Billing (JIB) charges to Ryan Kerr for inspection, and Jake Stewart will also review the JIB before we pay charges based on our 25% ownership share.
We are working to enhance production from the (65) NSB existing well-bores, and especially with regard to making our determination of the order of development actions being selected on the NSB leases. I agree with both Jake and Ryan on this issue since there are some immediate actions which can be taken to boost production, and these recommended steps to increase production are suggested by both Jake Stewart, and Ryan Kerr.
Our Stotts lease upgraded electrical line, and larger 160 KW transformer is expected to be installed Monday…this will enable us to draw the power we need to operate our two Stotts lease producers, and consistently do about 50-60 bopd or more from this great lease. We have our new drilling rig nearly paid for, and we’ll be equipping the rig to drill a new Stotts #8 well, and a new well on the Skinner or North Perkins well. We’ll then drill three new wells on our Osage lease. We look for 25-45 bopd from each of the Osage lease Bartlesville wells…which would be nice considering each well has a total cost under $150,000…or when we are using our own field crews, equipment, and drilling rig.
We have reviewed new invoices submitted by Jim Witcraft, and Jake has talked with Mr. Witcraft and now accepts the validity of these additional invoices submitted for work Jim paid for in August, September, October, and November for the Stotts, and North Skinner Leases. I suggested Jake talk with Eric Stall, and get an assignment completed for the Stotts Lease to TOG, and use the money we paid for the North Skinner Lease, and credit this to the pay-down on the Stotts lease balance owed of presently $85,000, so we can quickly get the Stotts lease bills paid, and get access to our suspended revenues. We can then pay Jim off on the North Skinner before drilling the first well…which I recommend we do…
Jake Stewart has been working with a friend at Oklahoma Corporate Commission (OCC) since they determined salt water contaminated soil must be removed from this lease. Jake plans to move the contamination of salt-water dirt to his property 20 miles away instead of to a treatment area which is a 200 mile round trip for our trucks, and hauling equipment. This is a big savings to us, but most importantly the OCC representative met with the insurance company yesterday, and our insurance company is on the hook for a majority of the cost of the Ewell lease clean-up costs. We expect to be paid as an operator for doing most of this Ewell lease clean-up work ourselves. Jake has been working with our attorney Eric Stall this morning, and we have agreed to the OCC plan to do the required clean-up on the Ewell leases. This coordination has involved several key people at the OCC.
The Doneghy lease Shirley well was plugged, and the OCC signed-off on this job we did while saving considerable money using our own equipment and crews. We paid about $2,000 for this work…it could have been $10,000 or more if we hadn’t been able to use our own crews, and equipment, etc.
The Priegal #1 did 5-6 bopd during its first night until a pump jack arm was fixed and is still recovering it’s water load. We are expecting the acid, and drilling mud, and water to be pumped-off and for this well to start coming-up in production soon.
Jake tells me Newton Doughty is on the Bartolina #1 and using our pulling unit to get this well back up. We’ll then have seven Doneghy wells producing; including the two new re-entry’s up and producing oil. Jake reports we did 12 bopd last night on the Doneghy lease. The two newly re-completed wells have increasing oil cuts each day now.
The recently re-entered Doneghy S-1 is on-line, and recovering drilling fluids, and increasing it’s oil shows, but Jake tells me the Dutcher zone can take as long as 30 days to begin yielding the increasing amounts of oil it will give-up from the Dutcher with its laminated sandstone, limes, and clay composition.
Jim Witcraft reports we are close to getting the drilling permit for three new Osage lease wells…and as we’ve all discussed new wells are going to be where we can establish the most production going forward with our development plans. Jim’s own newly drilled Osage well is coming-on strong, and Jake Stewart believes this shallow Bartlesville zone well can do 100 bopd. We are ‘smack dab’ in the middle of the ‘fairway’ between excellent production from this Osage lease area. We own 320 acres of the ‘center-cut’ or middle of the fairway hot spot.
Our November revenue distribution is going-out from Tulsa office in time for you to receive your revenue checks by Tuesday, November 30, 2010. We’ll have more expense information, and detail for you with this distribution, and we are still working to finish our Champion audit this year. I spoke with the accountant today, and supplied him some final bank balance information he needed to finish our balance sheet for the G.A.A.P. audit. We had a nice increase in production from July 31 to present, and it is getting better as we do the work necessary in the field. This is great progress for us.
Note: If you want or need tax write-offs this year, you’ll need to invest before December 31, 2010…if you want to be in on the November and December share of production you will need to invest prior to November 23rd, to take advantage of the oil & gas well sell this month…our distribution includes productidon sold or based on oil company buyer checks we receive on or before November 20, 2010. Call me with any questions about our investment procedures.
