Big Sky Petroleum Corp. (CVE:BSP) has revealed an NI 51-101 compliant resources report for its oil and gas leases in Schleicher County, Texas, as the company works to become an early mover in the Southern Midland Basin.
The company has amassed a 90 percent working interest in 3,450 net acres of oil and gas leases in Schleicher County, Texas, subject to mineral rights and an overriding royalty rate of 25 percent.
According to the report prepared by Petrotech Engineering, the best estimate for the company's gross share of gas resources on the leases is 1,786 million cubic feet (MMcf), while its gross share of oil resouces is pegged at 134,000 barrels (Mbbl).
For its net share of resources, the best estimate for gas is 1,373 MMcf and oil is 100 Mbbl.
Before tax, the net present value of the oil and gas resources at a 5 percent discount rate is projected at $5.2 billion, at a best estimate, while at a 10 percent discount rate, the net present value is seen at $4.3 billion.
Earlier this month, the company acquired a 90-per-cent working interest in 1,100 acres contiguous to its Midland Basin Wolfcamp prospect, increasing its total operated ownership in the area to 3,450 acres.
The Wolfcamp is a blanket formation across the Permian Basin of western Texas and acts as a source rock for much of the conventional oil production in the area.
Big Sky has said that due to the information it has accumulated from its first well in the area, dubbed the Schafer No. 1 well, it is actively seeking to increase its acreage position within this Wolfcamp prospect.
At present, the company pays 100 percent of the drilling, completion, facilities and operating costs for the first three wells until payout of these costs, at which time a third party will back in for a 10 percent working interest.
After the three wells, such third party will have the option to participate for a 10 percent working interest.
In January this year, the Schafer No.1 well was drilled to 7,370 feet to test the Wolfcamp and Spraberry formations in Section 2.
The well was completed with multi-stage fracture treatments, the company said Wednesday, and is flowing back fracture fluids at this time, but no test data is yet available.
The oil and gas exploration and production company has U.S. operations in Montana and Texas, and is focused on the development of unconventional tight oil reservoirs in the Southern Alberta Basin of Montana and the Southern Midland Basin in West Texas.
Big Sky noted Wednesday that the resources provided in the report released today are "undiscovered resources", which are defined as those quantities of oil and gas estimates on a given date to be contained in accumulations yet to be discovered.
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