Signature currently owns a 10% working interest with an option of 10% on additional wells on the prospect. The prospect has two potential targets for drilling, which previously have produced over 500,000bbls.
The company believes that the multiple Frio sands identified in the seismic profile could contain significant gas and condensate reserves and proposes to drill one to two wells to test the Frio zones.
Steven Weldon, chairman and CEO of Signature Exploration and Production, said: “The Frio formation, a sandstone interval, is one of the most prolific producers in South Texas. Our interests in this prospect lie directly on the trend with many other major gas/condensate producing fields.”
According to Texas Railroad Commission records, many of the wells have an accumulating production exceeding 200bcf (200 million mcf) and 300MBO. The Frio zones generally have higher permeability and porosity that lead to higher flow rates, the company said.
Mr Weldon added: “The oil and gas reserves on the lease are valued at approximately $225,000,000 based on a price of $4.50 per mcf. Based on the attractive sands formation and plentiful reserves, we are looking at a potentially lucrative, cash-generating property.”
