Sun Resources may slow down on further Delta Oil buys, flags cut in acquisition costs

Sun Resources (ASX:SUR) has flagged that it may stop short of acquiring its targeted 10,000 acres over the Delta Oil project in the highly prospective Eagle Ford Shale in Texas.

In a response to an ASX query about the rate which it was expending cash for the quarter ending 31 December 2011, Sun said it had already acquired the majority of the project and future acquisitions costs would be much lower.

Sun has already secured a 100% working interest over 6803 acres of the project.
   
Independent consulting firm Ralph E. Davis had in 2011 estimated unrisked 10 million barrels of net prospective oil resources in one sand unit of the Delta Oil Project for an NPV of $310 million.

Ralph E. Davis added there was potential upside of 10 to 20 million barrels of prospective oil resource in other sand units in the 137 metres (450 feet) thick sequence.
   
Recent horizontal wells within 56.3 kilometres (35 miles) of the Delta Oil Project have obtained initial flow rates of 900 to 1,200 barrels of oil per day from multi-staged fracced laterals of 1829-2134 metres (6,000-7,000 feet) in sandstone units.

Operators have also reporting estimated ultimate recoveries (EUR) of 300,000 to 600,000 barrels of oil per well.

These are comparable to wells located in better known producing areas of the Eagle Ford shale.

Sun also responded to the ASX on its negative cash flow, saying it was usual for exploration companies to have negative operating cash flow before commercialising a discovery.

It added the A$10.8 million it had raised from new and existing shareholders demonstrated its ability to raise exploration capital and that its total assets were A$8.8 million as compared to its total liabilities of A$100,506.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24809/sun-resources-may-slow-down-on-further-delta-oil-buys-flags-cut-in-acquisition-costs-24809.html