Foothills Exploration provides update on 7,000-acre acquisition in Montana
LOS ANGELES -- Foothills Exploration, Inc., an independent oil and gas exploration company engaged in acquiring and developing oil and natural gas properties in the Rockies today provided an update on its proposed acquisition of 7,000 acres and 87 oil and gas wells in Montana.
"We look forward to closing on this transaction during Q3 this year, and when closed we expect that this Montana asset will add accretive value to our asset base and complement our existing portfolio," stated Kevin Sylla, executive chairman of Foothills. “This planned acquisition will add another revenue producing property where we can improve operations, reduce costs, and secure value-added drilling and development opportunities to our exploration inventory."
Asset purchase
The target acquisition is located is in Montana’s North-Central basin and is oil-weighted. The properties consist of about 7,000 acres and a total of 87 oil and gas wells. These stripper wells currently produce approximately 106 bopd. The oil properties include 58 wells – 12 producing, 25 shut-in proved developed non-producing and 21 injection wells comprising the Sumatra and Big Wall/Little Wall fields. The gas properties consist of 29 stripper wells – 10 producing and 19 shut-in. The properties currently generate approximately $1.8 million in total annual gross revenues.
The Company has devised a field-wide optimization program designed to bring production back online from the 54 shut-in wells and expects these workover operations to generate a 100% increase in current production levels. “We expect that this acquisition will provide Foothills with significant upside from an operational standpoint, where we can workover existing wells, and from an exploration and development standpoint, where we can work on several behind-pipe opportunities,” said Sylla.
Future upside
The Company’s technical team believes that horizontal development is worth pursing in the Amsden and Tyler formations. In 1993, Texaco drilled a 2,000-ft horizontal well to the Amsden formation on the same acreage position, which had an initial production of 169 bopd and produced 158,000 bbl of oil with 12 years of flat production decline, and which further supports management’s belief in a future exploration program. Three additional structurally higher drilling locations offsetting the Texaco well have been identified with what management believes to be excellent development potential.
The U.S. Geological Survey (USGS) completed a geology-based assessment of the continuous (unconventional) oil and gas resources of the Big Snowy Trough area of central Montana and western North Dakota, which included a majority of the 7,000 acres being acquired by the Company. The USGS North-Central Montana continuous oil assessment unit, undiscovered mean resources summary for the Heath formation determined that there was an estimated 637 MMbbl of oil in the area.
The Company’s technical team, in conjunction with a third-party engineering firm, will perform a comprehensive study of the area and assess the optimal development plan for the Heath formation. In first-quarter 2019, another operator in the area announced a Heath horizontal discovery, west of the acquisition target’s Sumatra field.
“We are excited at the opportunity to acquire this asset,” continued Sylla. “We think there is tremendous upside development drilling conventional and unconventional horizontal wells from shallow depths across the acreage position. This acquisition gives us the opportunity to be at the forefront of an emerging horizontal play,” ended Sylla.
The Company expects to close on this acquisition on or about Aug. 22, 2019, subject to approval from the State of Montana, however, no assurances can be given that the transaction will close.
