The Austin Chalk formation is Upper Cretaceous in age and is found onshore in Texas and Louisiana paralleling the Gulf Coast. It is named after an outcrop near Austin, Texas. The Austin Chalk overlies the Eagle Ford Shale. It is a low-permeability fractured reservoir that has been the target for horizontal drilling since the mid-1980s, and consists of interbedded chalks, volcanic ash and marls.
Migration of Eagle Ford hydrocarbons was primarily along bedding planes during the expulsion phase. Absent of traps, hydrocarbons migrated updip or north, where vertical natural fractures were encountered. These natural fractures were associated with the regional fault trends. Here the hydrocarbons migrated into the extensively fractured Austin Chalk. In addition, in the current area of Eagle Ford Shale exploitation, both structural and stratigraphic traps are found. Traps in the area of the Karnes Trough include natural fractures close to the numerous sealing faults associated with the Karnes Trough structural features. The attached Figure is a depiction of a north-south cross section from the outcrop through the Gonzales field and Karnes Trough. The depiction illustrates trapping of Eagle Ford Shale hydrocarbons during updip migration.
As commented above, with the advent of the sharp decline in the oil price from $100 this allowed an opportunity to acquire a strategic holding within the central undrilled portion of the Gonzales Oil Field which had been accumulated by Av-Tech Oil & Gas LLC, an established player within the local South Texas petroleum sector. Av-Tech principal Mr. Rick McRae has successfully drilled some 250 wells within this area so partnering with his firm in the development of the proven petroleum reserves of the Gonzales Oil Field is a significant de-risking strategy centralised on both strong management and deep local understanding of the immediate petroleum sectors.
The Company has commissioned an independent Competent Person’s Report on its oil and gas assets by William W. Jackson (“WWJ”).
The summary tables below have been extracted without material adjustment from the CPR. The following information does not purport to be complete and is derived from, qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing in Part IX: “Competent Person’s Report”.
WWJ has reviewed the COGLA and proved non-producing reserves have been assigned (1P).
According to William W. Jackson and as reported in Part IX: “Competent Person’s Report”, as at the effective date of the CPR, the Company’s interests in the City of Gonzales Town Site Leases were as follows:
|1P (Mbbl) GROSS
|City of Gonzales Lease
According to WWJ, the Company’s interests in the COGLA asset have the gross and net (working interest) me an risked resources set out below:
|WORKING INTEREST (MBBL)
|NET REVENUE INTEREST (MBBL)
|WORKING INTEREST (MMCF)
|NET REVENUE INTEREST (MMCF)