Property details

Stripper wells, Southwest Region

Property Description

Stripper wells account for approximately 15% of the oil and 7% of the gas produced in the U. S. Stripper wells are oil wells that producing 10 barrels per day (b/d) or less and gas wells that produce 60 thousand cubic feet (Mcf/d) per day or less.

49% working interest available. Operator has history of rehabilitating stripper wells.

For sale is a collective group of wells consisting of two blocks of wells (one a 35-block of wells and the other a 88-block of wells).

The owner is looking to sell a 49% working interest in the properties for $3,800,000. The breakdown is interesting because the 35-block well interest is available for $2,400,000 while the much larger well grouping is available for only $1,400,000. The discrepancy is explained that the 88-block of wells are three months into their rehabilitation and very close to being pressurized which will result in quicker cash flow. If the 88-block don't move before they implement their program, one can expect to see a commensurate increase in price put into place.

There has been an industry group doing due diligence on the 88-block and the engineering studies are such that they will very likely put up their capital in short order. Without wanting to discourage a buyer from taking a run at the whole package, it is believed that the 88-block will not be available much longer.

The 35-block (30 producers) has projected numbers on a conservative side as follows:
30 X 3 b/d X $80 X 30 X 49% X 80% NRI = $84,672 per month before the cost of operations.

This would amount to a gross payout in 28.3 months. Utilizing a more aggressive projection with a goal of 8 b/d per well, the monthly gross before operations would equate to $225,792 and a payout in just over 13 months. Industry players who drill new wells look for a payout in under 2 years. These wells are attractive because the oil is known and in place with only a minute portion of the reserves having been extracted.

There are other wells that this owners owns and operates that were were doing 120 barrels a month when they took them over in late 2004. Today these wells are producing at 3,500 to 4,000 barrels per month out of 39 wells. They believe that the potential for the wells in this offering will be greater than what they have achieved in the above mention other well project. These wells are also available for about 60 months if a buyer wants energy and is adverse to accepting the risks of new wells or redeveloped wells.

The leases collectively have 90 existing production wells.

The owner has developed a plan to permit the leases for salt-water injection similar to what has been accomplished in its leases. The owner has assessed the properties and anticipates converting up to 14 wells into injectors and reworking the production wells. The 35-well block Leases (35 wells-30 producers/5 injection) are already in the process of pressuring up and the prescribed work has already commenced.

The wells originally flowed 6 to 13 barrels of oil per day. The injection process is designed to increase the down hole well bore pressure to approximate the pressure that existed when the wells were first drilled and by raising the pressure, The owner anticipates production of 3 to 8 barrels of oil per well per day. Unlike its th other wells, the oil from the these properties is classified Intermediate and commands a higher price.

Also Available: A 10,000 plus acre mineral lease interest that has the potential to catapult a $15,000,000 investment into a $300,000,000 asset in less than 24 months for a investor with an appetite for building a solid oil and gas company. This particular play has 27 hydrocarbon bearing zones in 5,200 foot depths. It is very exciting!

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Highlights

Status:
Withdrawn
Price:
$3,800,000
Cap Rate:
50.00%
Annual Rent:
$2,160,000
Rent Increases:
Inquire
 

Property Information

Property Type:
Oil Gas
Industry Type:
Oil - Gas - Alternative Fuels
Purchase Tenure:
Fee Simple
 

Existing financing information

N/A

The information contained herein contains confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient will be prohibited. The information contained herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about the accuracy or completeness of the information. As a buyer, it is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this property to you depends on factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. We have no knowledge of this offering other than the information received from Seller or their representatives. We are neither your agent or an agent for the seller. We will not participate in the negotiation of the purchase price or attend the showing of this property. As a buyer, you will be required to indemnify us and hold us harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this property.