Heartland Oil and Gas Corp (HTOG.OB) engages in the exploration, development, production, and sale of coalbed methane in Kansas and Texas. The company owns and operates oil and gas leases in these states on nearly 650,000 acres of property. As of December 31, 2007, Heartland Oil and Gas had proved developed net reserves of 2,410,484 thousand cubic feet of gas, and 3,002 thousand barrels of crude oil.
The management of Heartland Oil and Gas recently initiated contact with institutional investors and private equity funds that specialize in oil and gas exploration and production. These discussions have focused on the development of at least 300 wells over the next 12 to 24 months. The company has obtained reports from its consulting petroleum engineers establishing reserve projections for the expected 10-year production life of each well. At a natural gas price of $12/MCF, which is below the current market price of $15/MCF, the engineers estimate that every well should produce $1.2 million over a lifetime.
Heartland Oil and Gas has already drilled and completed 21 wells in the Cherokee Basin area of Kansas. The good news is that 99 percent of these wells are producing gas in commercially viable quantities. These successful results should help the company obtain the $39 million necessary from private equity and institutional investors to drill an additional 300 wells in this area. If financing is obtained, it could mean that the company will have a steadily growing revenue stream over the course of the next decade.
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