On April 16, 2007, we closed the acquisition of assets from Caldwell, consisting of 48 mineral leases with 631 wells, of which approximately 100 are producing wells and 531 inactive well bores equipped with necessary production equipment, and related operating facilities and equipment including an office warehouse facility, ten pickup trucks, three pulling rigs, a backhoe, a winch and a water truck. The purchase price for the mineral leases was $5,000,000, and for the equipment $291,000.
The oil and natural gas leases purchased are on approximately 8,000 acres in Gray and Carson Counties, Texas, with a well spacing of 10 acres, and are in the Panhandle Field, discovered in 1920. This field produces from Pennsylvanian and Permian age granite wash and brown dolomite. The field covers 200,000 acres in eight Texas counties.
Our estimated proved developed producing reserves are 750,000 barrels oil equivalent. The current production from our producing wells is approximately 3,000 barrels per month and approximately 4,000 mcf of natural gas per month. Our wells produce 40 gravity West Texas Intermediate crude oil and 1,600 - 2,400 btu/scf natural gas.
Our primary focus is will be to operate our properties and to restore 10-20 wells per month to production. A typical well restoration we estimate will cost $2,500 to $5,000. To supplement our growth, we may also consider mergers and acquisitions, although we have no acquisitions contemplated or under discussion at this time.
Since April 16, 2007 and as of April 30, 2007 we have restored approximately 40 wells to production bringing the total number of producing wells to 140, at a cost of $45,000, including allocated internal costs.
Appointment of Officers and Election of Directors
As authorized at a previous meeting of the Board of Directors of the Company, effective April 16, 2007, Mr. Robert Gordon resigned as our Chief Executive Officer and Mr. Bradley W. Fischer was appointed as our President and Chief Executive Officer and was elected a director of the Company to fill a vacancy on the Board. At this Board meeting, effective also April 16, 2007, Alan M. Wright was appointed as our Executive Vice President, Chief Financial Officer, Treasurer and Secretary, and Peter Harris was elected as a director to fill a vacancy on the Board of Directors.
Mr. Fischer, age 60, received a B.S.M.E. degree from the University of Nebraska in 1972, and completed the Program for Management Development from Harvard Graduate School of Business in 1991. Mr. Fischer is a registered professional engineer and has been a petroleum consultant since 2002, providing strategic evaluation services to independent oil companies considering international investment programs, evaluating domestic assets for acquisition and arranging financial backing for start-up companies in the U.S. From 1997 to 2002 he was President and Chief Executive Officer of CMS Oil and Gas Company. Prior thereto, Mr. Fischer held positions with Ashland Exploration, Inc., his final position being Senior Vice President (International and Gulf of Mexico), and with Mitchell Energy Corporation, Tenneco Oil Company and Texaco, Inc. http://www.zoominfo.com/Search/PersonDetail.aspx?PersonID=1308757
Mr. Wright, age 62, earned his Bachelor of Science degree in Economics from Cornell University in 1969. He has also completed post-graduate studies in Accounting at the University of West Florida and Stanford University's Executive Management Program in 1982. From 2002 to 2005, he was Senior Vice President - Administrative and Financial Operations and Chief Financial Officer, at Aastrom Biosciences, and served as a director of that company from 2000 to 2005. Prior thereto, from 1991 to 2002, he was Executive Vice President and Chief Financial and Administrative Officer of CMS Energy Corporation and its principal subsidiary, Consumer's Energy.
Peter Harris, age 54, has a Bachelor of Business Administration degree from the Royal Melbourne Institute of Technology University and is completing his Master's of Business Administration at the same university. He is Executive Director of the Uranium Club of Australia, a member of the Advertising Federation of Australia and has been a director of Recycle (Australia) since 1996. He is currently overseeing the planning and implementation of exploration for metals under an exploration license issued by Minerals Tasmania, the minerals arm of the Tasmanian Government in Australia, and is currently in charge of strategy and development for a Melbourne-based investor relations firm specializing in publicly-traded oil and gas companies.
Effective May 23, 2007, Mr. Maxwell Grant was appointed as our Chairman and a director of the Company to fill a vacancy on the Board. Maxwell Grant, 69, whose company, Koala Pictures, is Chancellor's largest shareholder, has a business degree and a journalism diploma in 1960 from Melbourne University. A former international journalist and university lecturer in the early 1960's in labor relations at Monash University, Melbourne, his New York-published novels have been translated into several languages. His wide range of interests include TV and film production, film financing and more recently oil and gas. For the last three years, Mr. Grant has primarily concentrated on locating a suitable acquisition for the Company and worked on several other film and investment projects. He co-founded in the late 1990's and was a 19% shareholder of Majestic Film Management Limited, Melbourne, Australia, which raised several million dollars for international feature films for Village Roadshow Pictures. The film JOEY, which he conceived and on which he was Associate Producer, was sold internationally to MGM. Mr. Grant devoted his time and efforts to locate for Chancellor its recently-acquired producing oil and gas property, which was purchased from Caldwell Production Company, in Texas. He participated in negotiations on behalf of the Company for the purchase of the property and identified the sources of financing for the Company to complete the acquisition.
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