May, 2009
Wyoming
The Company has acquired a majority working interest position in a large lease block(14,800 gross acres) in the Powder River Basin, Wyoming. This project, Lateral Pond, offers tremendous potential for the emerging resource play in the Mowry Shale. The property currently has four wells producing approximately 60 BOEPD from the Mowry Shale. During the second half of 2009 a new Mowry well will be drilled and completed with a stage frac to prove up the viability of Mowry production. Several other oil bearing zones are known to exist within the leased lands and will be developed as well.
At the Northern end of the Powder River Basin the Company has plans to explore for additional Minnelusa production. The Hart Draw prospect offers two distinct possibilities for production. Drilling of theis prospect is scheduled for late 2009.
Louisiana
A recently signed farm out agreement will allow a second party to participate in the drilling of new well locations in the Section 28 Field. In return a comprehensive field review of seismic, geological and engineering data will be performed to identity these prospects.
California
In Kern County Termo has formed a water flood unit with an adjacent partner at our Mountain View field. Studies have indicated that a water flood will significantly improve our ultimate oil recoveries from properties that we are currently operating. An idle well has been reactivated and an injection test has been completed. Full scale water flood operations are scheduled to begin in late 2009.
Termo's review of the geologically complex area of the Aliso Canyon and Oat Mountain oil fields has resulted in the drilling of two new wells. Several pay zones were found in each well and are on production. Initial results have been very encouraging. New information from these wells is being incorporated into a geological interpretation to enable further development.
We have acquired 3D seismic data over our producing leases in the Willows gas field. Initial interpretation of the data has revealed at least two potential drilling prospects.
Texas
A Barnett shale royalty interest covering approximately 6,000 acres that the Company acquired in April 2005 continues to perform very well. New wells have been drilled and development is ongoing in the area located near Fort Worth. Development of the reserves on the Termo royalty properties will provide for a strong cash flow for several years.
Colorado
The Termo Company has put together a project in the southern part of the Great Divide Basin in northern Colorado. This project (the Mud Gulch Project) will target shallow gas sands at approximately 3000 feet deep. In addition to the primary objective, at least three other speculative zones are known to be present; including the high potential Mancos shale. The initial exploratory well is currently being permitted with plans to drill this prospect before the end of 2009.
North Dakota
Termo is participating as a non-operated working partner in leases located in Dunn County, North Dakota for the exploration and development of the Bakken Shale. The Company has a working interest position ranging from 1% to 14% in approximately 3950 gross acres. As of June 2009 four wells have been drilled and successfully completed as oil wells. Gross production for the four wells is approximately 500 BOPD and 350 MCFD. Currently, there are not any plans for future drilling, but several potential drilling locations remain.
