Red Fork Energy expects to make an additional $1 million each year in revenue after it struck a deal with a US company to market gas from its Pawnee prospect.
Red Fork Energy expects to make an additional $1 million each year in revenue after it struck a deal with a US company to market gas from its Pawnee prospect.
The announcement is below:
Red Fork Secures Access to Market for West Tulsa Gas
- Agreement reached for access to a gas market for the Pawnee Prospect at West Tulsa
- Red Fork to receive 80% of the spot price and 80% of plant liquids proceeds
- Shut-in and currently vented gas to be directed to sales in the December 2009 quarter
- Potential for in excess of US$1,000,000 per annum boost to already significant oil production
revenue
- Five production wells drilled and completed, two producing with three currently testing
US-focused oil and gas exploration and production company Red Fork Energy Limited ("Red Fork" or "the Company") is pleased to announce that it has reached agreement with a large US midstream natural gas company to market gas and liquids produced from its 100% owned and operated Pawnee Prospect (located within the Company's larger West Tulsa Project).
Under the terms of the agreement, Red Fork will receive 80% of the spot price for gas produced (as well as 80% of liquids proceeds) from the Pawnee Prospect wells. Work has already commenced on the construction of a short section of pipeline to join the Company's existing gathering infrastructure to the midstream company's transportation line.
This work is expected to be completed during the December quarter at a cost of approximately US$15,000 with first gas sales expect before the end of 2009.
To date Red Fork has drilled six wells at the Pawnee Prospect (five production wells and one water disposal well) with very successful oil production results already achieved from the Fuss#1-34 and Rosier #1-27 wells. A further three wells have already been drilled and completed and are currently being production tested.
Gas produced from these wells (in excess of 300,000 cubic feet per day) is currently shut-in or is being vented. This gas will be directed to sales as soon as the pipeline has been constructed and commissioned, generating approximately US$1,000,000 in additional revenue for the project.
As previously announced, Red Fork has identified the opportunity to establish up to 20 wells in this part of the West Tulsa project and the Company now expects to be able to add significant
gas production to the already significant oil production potential.
Further development of the Pawnee Prospect at West Tulsa is expected to be funded from existing working capital and ongoing production revenue. Importantly, the Company has already established extensive permanent production facilities to service this part of the West Tulsa project, including tank batteries, separation equipment and gathering infrastructure.
