In the natural resources exploration and development game, all the testing and exploration in the world is of little use unless the end-product can be extracted at a profitable cost/price ratio. For the most part, achieving this ratio requires excellent planning and execution to maximize yield and minimize cost. From an investment perspective, a management team with a valid, long-term plan and the capacity to make it work is required. An investor who can find such a team, and company, with development prospects is an investor who will most likely profit.
Petrosearch Energy Corp., an oil and gas exploration and development company, works to exploit oil and gas deposits primarily in Texas. The company holds exploration and near-term development properties in North Dakota and Mississippi.
From all appearances, the company is following a well-calculated and forward-thinking strategy of exploration and development. February 2006 found the company entering the Barnett Shale region as a partner in DDJET Limited LLC. Since that time, it has elected to exercise its option to sell its 5.4% interest in that project for an estimated $36 million to become debt-free and focus on other opportunities. Currently, those other opportunities include a 1,755 acre parcel of once-developed oil leases located in Texas, drilling opportunities in North Dakota and a section of gas exploration property in Mississippi. The Texas property is now the primary focus.
First drilled in 1953, only 5 million barrels of oil were recovered from the Texas site with the technology of the period. With today’s technology, independent testing facilities estimate that the extraction of proven reserves of 1.5 million barrels of oil and potential reserves of 5 million barrels are possible. At present, the company has reentered 7 wells with infill drilling processes to assess mechanical status. Two wells are producing. As conditions warrant, the company will continue its program to include 13 more wells that were not plugged at the site.
Treated and filtered water is currently being pursued from third-party providers to lessen costs, with on-site water as a backup. Full flood installation is expected by the end of 2008. As the company follows its development program, it is fairly apparent that each step has been panning out as anticipated. If the past is any indication, Petrosearch Energy is primed for a long and profitable run as it begins to pick and choose its next projects. Solid planning and execution has been the hallmark of the company, and it shows.
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