30th Jun 2008 07:00
PRESS RELEASE
June 30 2008
Sefton Resources, Inc. ("Sefton Resources" or the "Company")
OPERATIONS UPDATE AND EQUITY DEALINGS
Sefton Resources, the AIM listed oil and gas production company with assets in California and Kansas, announces an update through its wholly owned subsidiary TEG Oil and Gas Inc. ("TEG") regarding the Tapia 2008 Q1 Drilling and Pilot Steam Programme, and equity transactions involving two directors and two loan note holders.
OPERATIONS UPDATE
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Tapia Field - Cyclic Steaming Pilot Programme
The second well in the steam pilot, Yule #10, will be returned to production July 1, 2008, following a successful three week steam soak cycle. The first well, Yule #7 is producing at elevated temperatures 20˚ above that of untreated wells after two months of production, indicating good heat retention of the steam energy in the surrounding reservoir. Production on the Yule lease has been relatively steady despite having the Yule #10 off-line during its steam-soak period. This is mainly due to the increased productive rate of the earlier steaming of Yule #7.
Tapia Q1 2008 Wells
TEG is in the process of evaluating the production and reservoir information from the three Snow lease wells. The wells continue to produce with good oil cuts. The wells are currently being considered as the next cyclic steam candidates, given their proximity to the lease gas source well, Snow #1. TEG will continue with implementing different pump arrangements to maximize the productive rates from these wells. The installation of a larger pump in the Lackie #A-4 well has increased the production from the well by 30% to 35% based on daily metered well tests.
Water Production Normal in Oilfield Operations
In response to some shareholders enquiries regarding water production in Tapia oilfield operations Harry Barnum, managing director of TEG Oil & Gas comments:
'Water naturally occurs in virtually all oil reservoirs in varying percentages and thus is produced along with crude oil in the normal production stream from any given oil well. The exception to this may be new wells that produce from a new oil reservoir. Over the life of a well (and later in the productive life of an oil reservoir), the percentage of water gradually increases. The Tapia field has been producing oil (and water) for over 50 years and has a future productive life of an additional 40 years based on the most recent independent engineering reserve report conducted on the field. The average water cut (2007 annual data) for California District 2 oilfields (44 oilfields in the vicinity of Tapia) is 86%. Tapia produces very near to that average at approximately 90% and thus, is typical for the region. TEG has recently upgraded the water handling facilities at Tapia as reported earlier, in anticipation of new wells and steaming operations and manages the oil as part of the operation. All produced water is separated from the crude oil at the Tapia production facilities and is re-injected into the subsurface. This aids in maintaining subsurface pressures and sustains well productive rates'.
Eureka Canyon Field - Well Work
TEG has completed the clean outs and pump changes this week for wells in the Eureka Canyon Field. This is part of the normal cycle of well maintenance for this field. All wells capable of oil production are now returned to production. The periodic well clean outs remove silt and very fine sand that collects in the well over time and allow better exposure of the oil zones for production.
Chairman's comment
Commenting on the current situation, Chairman Jeremy Delmar-Morgan said:
'The year has started successfully. We continue to trade profitably and cash flow is running at expected levels. This is enabling us to push ahead with the steaming and drilling progammes outline in my last Chairman's statement. None of the problems that we have encountered in the pilot steaming programme were unusual; we believe that they can be resolved and provide excellent data for the ongoing programme'.
EQUITY DEALINGS
On 24 June 2008, two note holders of the company converted notes totaling $7,000 into 47,425 shares at a conversion price of 7.5p.
In addition, also on that date, two directors, Mr. A. Ashton and Mr J. Delmar-Morgan exercised options to subscribe for 150,000 shares each at 6p per share, following which Mr. A. Ashton now holds 1,098,267 shares and Mr. J. Delmar-Morgan 4,780,178 shares representing 0.9% and 4.1% of the total voting rights respectively.
Application will be made for a total of 347,425 new common shares in Sefton Resources to be admitted to trading on AIM and admission is expected to take place on 4 July 2008.
Enquiries:
Jeremy Delmar-Morgan, Chairman, Tel: 077 8900 4874
John James (Jim) Ellerton, CEO, Tel: 00 1 303 759 2700
David Millham, Investor Relations, Tel: 07850 949324
Jonathan Wright/Nicola Marrin, Seymour Pierce, Tel: 020 7107 8000
Note: The information in this release has been compiled and reviewed by Harry Barnum, a director of Sefton, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr. Barnum has Bachelors and Masters Degrees in Geology and over 25 years of experience in the oil and gas industry. He is a registered professional geologist in the State of California.
Sefton Resources is an AIM listed oil and gas production company. Its main core area of activity is in the East Ventura Basin in California, where it owns 100% of two oil fields, Tapia Canyon (heavy gravity oil) and Eureka Canyon (medium gravity oil), both of which have over twenty years of expected production life. In addition, Sefton has over 40,000 acres in the Forest City Basin of Eastern Kansas where Coal Bed Methane gas, as well as conventional oil and gas deposits, are targets.
Related Shares:
SER.L