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Stewart Prospect - Jobar Field, Goliad County, Texas
Introduction
In February 2005, the Company acquired the Stewart property, a middle Yegua prospect in Goliad County having three or four high quality locations on a 272 acre lease. This prospect is situated within the Jobar field which produces from the middle Yegua formation from 5,200 feet to 5,400 feet in a normal pressured regime. The prospect is defined by five 2D seismic lines. A 3D seismic program is available over the prospect and has also been purchased by the Company. This will help guide development of the prospect ensuring the highest probability of best success.
Geology
The prospect is located in the Middle Yegua sand trend in central Goliad County. In 1998, Edge Petroleum discovered the Jobar Field in the Yegua formation using amplitude analysis initially of 2D seismic lines followed by 3D seismic. The cumulative production to date from this field is 5.314 BCF from 7 wells with an average production per well to date of approximately 760 mmcf.
Five seismic lines have been used to define the prospect. The middle Yegua sands appear to have been deposited as fluvial bars trending in a general ENE to WSW direction modified by small displacement down to basin faults.
A strong amplitude anomaly is associated with the neighboring Edge V Albrecht #1 well which was drilled at a shot point on the FB-88-1 line running across the Stewart Prospect. The well was perforated from 5,371 feet to 5,393 feet covering 16 feet of net good porosity and produced a cumulative 614 mmcf of gas plus condensate. Seismic data indicates that this well was drilled on a sand bar covering 60 to 65 acres.
One potential location is shown on what is interpreted as a sand bar of approximately 110 acres. Further potential locations are indicated on three other bars within the prospect. These locations will be refined through analysis of 3D seismic data upon which it is anticipated that three or four excellent quality locations will be determined.
Productivity within the Jobar Field
The other wells in the Jobar Field have had average initial production of 1.5 Mmcf of gas per day plus approximately 5 bbls of condensate. Generally, these wells have produced from 1.5 to 1.6 Mmcf per day for 4 to 6 months and then go into decline with an ultimate life of about 5 years. Gas in the area from the Yegua has a btu of 1,100 btu/mcf resulting in a premium of approximately 10% on the price paid for the gas.
DEEP PROSPECT
MARSHALL (MIDDLE WILCOX) FIELD - STEWART LEASE
Background
Gas and condensate were discovered in the Marshall field in the Middle Wilcox formation in 2003 by Chesapeake Energy Corporation (private company) operating on the Carmichael lease in the P.B. Dexter survey A-319 located in the North end of the Marshall field. This is located approximately 1.5 miles north of the Stewart lease. The Chesapeake Carmichael #1 well was put on production in December 2003 at an initial production rate of 5 MMCF/D and 50BBLS/MMCF/D condensate per day. As of April 2005, the well has produced 1.31 BCF of gas and 49,132 bbls of condensate.
Subsequent to this discovery, Chesapeake has drilled several more wells into the Middle Wilcox on the Carmichael lease and the Bammert lease in the J.C. Bridgeman survey located north and east of the Stewart lease. All wells drilled are producing between 1 and 5 MMCF/D.
Santos Ltd. and Etoco have extended the field to the south with a series of wells in the D. Canton survey A-86 and the southern part of the Bridgeman survey. The most prolific to date is the Eichman #1 well drilled by Santos Ltd. This well was completed in April 2005 and was tested at 21 MMCF/D with approximately 30bbls/MMCF condensate. This well has recently been put on stream reportedly producing in excess of 21 MMCF/D.
Etoco Inc. is currently operating on the Heard lease in the Canton survey ½ mile to the north of the Stewart lease. The Heard #1 well was completed in January 2005 and tested at 8.9 Mmcf/d with in excess of 50bbl/Mmcf condensate from perforations between 10310-10342' and 10927-10957', a total of 62'.
The Marshall (Middle Wilcox) field is extensive in this area. 2D seismic line SRI -- 1 runs North-South near Etoco Heard #1 well and extends through the Stewart lease. The Wilcox anomaly can be observed in the Etoco Heard #1 well area. There is a fault near the Stewart lease boundary causing the Wilcox to be down thrust to the south. The 2D Wilcox anomaly then resumes through the Stewart lease along SRI -- 1 and continues for the length of the lease.
3D Seismic Interpretation
Based on the recent Wilcox activity in the area, Horizon acquired and processed the 3D data covering the Wilcox horizons on the Stewart lease. The data is of high quality and shows that the Stewart leases are on the next down faulted block from the wells in the Marshall field. The amplitudes appear to be at least as strong or possibly stronger than the Marshall field.
Cautionary Note to U.S. Investors-The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms on this web site, such as probable and possible reserves, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our annual Form 51-101, available from us at 1710 - 1040 West Georgia Street, Box 83, Vancouver, BC V6E 4H1. You can also obtain this form at www.sedar.com.
Copyright © 2006 Horizon Industries Ltd. All Rights Reserved.
