West Perth-based freight vehicle maintenance company Transerv Australia Ltd will acquire a 12.75 per cent interest in a California oil and gas project for the issue of $400,000 worth of options.
West Perth-based freight vehicle maintenance company Transerv Australia Ltd will acquire a 12.75 per cent interest in a California oil and gas project for the issue of $400,000 worth of options.
The 40 million options will be exerciseable at 1c each, with the company also reimbursing approximately $50,000.
The site is to be operated by Salinas Energy Ltd.
Being re-admitted to the ASX two weeks ago, Transerv also recently completed a capital raising of $2.8 million to fund expenditure commitments, and continues to evaluate new investment opportunities.
The full announcement is pasted below
Transerv has agreed to acquire a 12.75% interest in the Wind Gap oil and gas appraisal prospect located in the Southern San Joaquin Basin in California. Salinas Energy Limited (ASX: SAE) is the operator.
To acquire the Wind Gap interest, Transerv will issue 40 million options exercisable at 1 cent each on or before 30 June 2010 and reimburse approximately A$50,000. Half these options will be conditional upon commercial production being achieved from Wind Gap by 30 June 2007.
The operator interprets Wind Gap as an extension of the North Tejon oil and gas field which has produced some 229 billion cubic feet of gas and 23 million barrels of oil and condensate. The Wind Gap prospect area has potential for an estimated recoverable resource of 60 bcf of gas and 6 mmbbls of petroleum liquids. The initial Wind Gap 42-36 well is expected to spud in late August and take approximately 60 days to drill to a planned total depth of 12,500 feet. The well comprises multiple target zones in the sandstone reservoirs of Oligocene to Eocene age, all of which are producing in the adjacent North Tejon field. Transerv is to pay 15% of the cost of drilling the first two wells at Wind Gap and then 12.75% of any further wells. The estimated dry hole cost of the initial Wind Gap 42-36 well is US$3.3 million, of which Transerv's 15% share will be US$495,000.
There are 2 leases (sections 35 and 36) covering the prospect area totalling approximately 1,580 acres. The net revenue interest to the project partners is 76.67% on both leases, with deep rights (below 6,600 feet) available on section 36 and all depth rights available on section 35. There is existing production infrastructure available in the immediate area which would enable a relatively short time for hook up in the event that commercial reserves are proven.
The Transerv Board is pleased to be acquiring an interest in the Wind Gap project, located in the highly prospective Southern San Joaquin Basin and adjacent to the producing North Tejon gas and oil field. This will provide the Company with a dual operating focus, with Wind Gap providing exposure to the United States energy market and the Company's existing Westrans Services vehicle maintenance business seeking to capitalise on growth opportunities generated by the strong Western Australian economy.
