ASX-listed oil and gas company Xstate Resources (ASX:XST) has acquired a 25% working interest in 10,240 gross acres of leases located adjacent to the company’s Red Earth Properties in Alberta, Canada.
The company says it has acquired this interest from Canadian private company Blue Sky Resources for CAD$750,000. This acquisition includes 2 oil discovery wells that have been drilled, completed, and recovered oil. Xstate reports these wells are planned to be equipped and put into production soon.
The company also notes 10,240 gross acres of unencumbered crown land with no rehabilitation liabilities beyond the existing wells have been included in the acquisition, as well as 10 Keg River Formation prospects mapped within the acreage which have similar technical characteristics to the existing discoveries and fields in the region.
These prospects were also identified on a 30km-square 3D seismic survey acquired in 2002.
“The operator expects to drill the Blue Sky-1 well on the new acreage in 2023 and are fast-tracking the spudding of this well”
Xstate reports an additional net payment of CAD$66,250 per well is payable should either of the 2 discovery wells produce at a rate greater than 100 barrels of oil per day (BOPD) each for a period of more than 45 days when production restarts.
Commenting on the acquisition, Xstate Resources Executive Chairman Andrew Childs said: “We are pleased to add these discoveries and leases to our oil rich Red Earth producing assets.
We appreciate that the operator, Blue Sky Resources, made this opportunity available to Xstate on the same terms as they purchased it (without any markup or promote).
The operator expects to drill the Blue Sky-1 well on the new acreage in 2023 and are fast-tracking the spudding of this well.”
Xstate reports only 2 wells have been drilled on the lease since the 3D seismic survey was acquired, and both discovered and recovered oil from the Keg River Limestone.
Initial mapping by Blue Sky Resources has identified a further 10 prospects on the leases. These prospects all show seismic and structural characteristics similar to the 2 discoveries and fields in the local area in the Keg River reservoirs.
The company says the Blue Sky-1 prospect is a top priority for exploration with drilling depths to the Keg River Targets less than 1,500. This priority target is also located near an existing, and producing well owned and operated by Blue Sky.
Xstate reports this acquisition increases the company’s overall lease position in the Red Earth area to 28,560 net acres. Total daily production from Red Earth for December 2022 was 862 BOPD. The company anticipates this production to grow ‘significantly’ in the coming year with production from the discovery wells plus planned Blue Sky Prospect drilling in 2023.
Xstate Resources is an ASX-listed company focused on the oil and gas sector. The company has oil and associated gas production interests in Alberta, Canada, as well as Austria. It also has exploration assets in the Sacramento Basin in California, US.
Images: Xstate Resources Limited
