Pangea has identified additional prospects scheduled for drilling in 2006 in Colorado County, Texas; Brazoria County, Texas; White County, Illinois and Steuben County, New York. In addition we are monitoring activity in Henderson County, Texas and De Witt County, Texas for possible investment. We are also in the process of evaluating several additional prospects for inclusion in the 2006 program.
We participated in our first project during 2006 which was the drilling to the Wilcox in Colorado County, Texas. The well was drilled to 10,050' during January 2006 based on data developed from a 3D seismic survey and analysis of existing Wilcox formation in the area. The well found the target objective lower than anticipated in the geologic structure and was tested in three intervals and deemed sub-commercial. Further review is being conducted to see if any locations can be identified for drilling on the leases further up on the structure. Pangea has a 2.0% working interest and a 1.5% net interest in the prospect
On January 6, 2006 we acquired a 1.5% working interest in oil and gas leases located in Fort Bend County, Texas and a 2.5% working interest in oil and gas leases in Steuben County, New York, in a restricted stock transaction with Scully Oil and Gas. As consideration for the interests we issued 20,000,000 of our restricted common stock and will issue 10,000,000 warrants upon meeting certain revenue targets in the two projects.
The Fort Bend County interest of 1.5% is a 421 acre project currently producing approximately 6500 barrels of oil per month from fifteen wells in the Miocene and Frio sands. Current plans call for the drilling of four additional wells in the next six months. Pangea will not receive revenue from the project until payout by the operator of drilling and acquisition expenses. Payout is currently expected before the end of 2006.
The New York interest of 2.5% covers approximately 50,000 acres in Steuben County, New York. The project is currently shooting twenty-two square miles of 3-D seismic. Thus far there are two well defined drilling prospects in the Trenton Black River, and two leads identified in the Oriskany and Onandaga Reef sands. Additional seismic work is planned for 2006 and it is anticipated that drilling on the first well will commence in the second quarter.
On January 6, 2006 we purchased a 3% working interest and a 2.25% net interest in a prospect in White County, Illinois that encompasses approximately 880 acres. The primary target is the Warsaw Sand at 4200' with several secondary objectives present up to 3200'. The first well is anticipated to be drilled the first quarter of 2006 and will be drilled beyond the Warsaw to approximately 8500' to test a geologic feature in the Trenton Black River, which appears to be similar to the seismic features found in the successful producing areas in New York and Michigan.
In February 2005, Pangea purchased a 7% working interest in a re-entry workover in Brazoria County, Texas. The well was drilled in 2002 and experienced mechanical difficulty in the first of four zones in the Miocene sands. The logs indicate three additional sands behind pipe which will be sequentially completed for the project. Work is expected to begin prior to the end of the first quarter 2006.
Pangea is continuing to monitor additional projects for potential participation:
Henderson County, Texas is an 11,500' test in the Rodessa and Pettit with a secondary objective in the Upper Travis Peak. The first well has the potential for an additional well in the fault trap and, if successful, will lead to drilling in four additional analogous fault blocks on the leased acreage. If we participate in this project we expect to have a 2% working interest and 1.54% net interest in the first well. We are still evaluating the well and if participation is taken as currently expected, the drilling will not proceed until mid 2006.
De Witt County, Texas is a 4800' test of several stacked Yegua objectives identified by 3D seismic data. The prospect is on trend with existing Yegua production and there is considerable shallow Frio and Miocene production that appears in the area. Two recent 3D wells to the south back up the seismic analysis on the prospect and if successful, the lease could provide a follow-up location. Pangea plans to commit to a 6.67% working interest and a 5% net interest in the prospect. It is expected that rig availability will allow this well to be drilled in the fourth quarter 2006.
Pangea is actively reviewing additional prospects in Texas and Louisiana to add new wells to the prospect list. We are continuing our strategy of evaluating primarily shallow, onshore oil and gas projects that avoid investing in "wildcat" or exploratory wells. Focus remains on investing in development well prospects that are supported by seismic data, proven production from the surrounding area and positive information from adjacent wells. Additionally, Pangea will continue to diversify our risk by taking a minority working interest in the prospects such that we are not dependent on any one project or highly impacted by an unsuccessful well. The ability to invest further will be heavily dependent on securing additional capital from investors or debt financing. There is no assurance that additional equity or debt financing will be available on terms acceptable to Management.
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LONDON (Reuters) - Oil rose above $70 a barrel on Tuesday, rebounding from a sell-off the previous day that sent prices across commodity markets tumbling from record or near-record highs.
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