Sun Resources secures additional acres in prolific Eagle Ford Shale trend in Texas

Sun Resources (ASX: SUR) continues to progress the acquisition of significant acreage in the prolific Eagle Ford Shale trend in onshore Texas.

The company has now completed the acquisition of the first two tranches of oil and gas leases within the Delta Oil Project for a 100% working interest of 2922 acres.

Sun will continue progressing the acquisition of further acreage in the Delta Oil Project to up to 10,000 net acres in total.

This will be subject to the completion of due diligence, shareholder approval and completion of tranche two of the placement announced last month, and execution of a formal Asset Purchase Agreement between Sun Resources and the vendor.

Matthew Battrick, managing director of Sun Resources, commented positively by adding “Sun is pleased to have secured these two tranches of mineral leases covering high quality acres in the Eaglebine oil play of East Texas, on trend with the world-class Eagle Ford Shale oil and gas fairway.

"We look forward to securing the balance of the 10,000 net acres to provide Sun with a very significant position in this emerging oil play.”


The highly prospective Delta Oil Project

Independent consulting firm Ralph E. Davis has estimated unrisked 10 million barrels of net Prospective Oil Resources in one sand unit of the Delta Oil Project.

Assuming production of the 10 million barrels of Prospective Resources, Ralph E. Davis estimated the NPV of the Delta Oil Project of US$310 million would equate to:

- NPV of US$10,333,333 per well; and
- NPV of US$31 per barrel of oil for 10 million barrels of oil from one 20 feet thick sand unit.

Recent horizontal wells within 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 6,000 to 7,000 feet in sandstone units and operators are reporting Estimated Ultimate Recoveries (EUR) of 300,000 to 600,000 barrels of oil per well.

Sun has entered into a binding Term Sheet with a Houston based private oil and gas company, where Sun will acquire 100% working interests in all of the leases, each with a minimum 75% net revenue interest, a three year lease term and in most instances, also have a 2 year option to extend the lease term.

Highlighting the potential of the project, independent petroleum engineering and geological consulting firm Ralph E. Davis estimates unrisked 10 million barrels of net Prospective Oil Resources in just one sand unit.

The consultants also pointed to the potential upside of a further unrisked 10 to 20 million barrels of Prospective Oil Resources in other sand units in the 450 feet thick prospective sequence.


Entitlement Issue launched

The company has also launched an Entitlement Issue priced at $0.017, the same price as the recent placement, which is a 26% discount to the last closing price.

The entitlement will comprise 1 new share for every 4 held, and would raise an additional $1.9 million if fully subscribed.

Sun has previously announced a A$10.8 million capital raising program to fund the Delta Oil Project, and to also finance early exploration activities.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19716/sun-resources-secures-additional-acres-in-prolific-eagle-ford-shale-trend-in-texas-19716.html