Matthews Lease

Matthews Lease Eagle Ford Shale Target

According to a Resource Study completed by RPS in April 2010, the Eagleford Energy Matthews Lease “is located on the northeastern part of the Maverick Basin in the Eagle Ford ‘oil window’ at approximately 4,600 feet with Eagle Ford completed well locations. Within the field, two wells have penetrated the Eagle Ford Shale. These are the D.S. Ring Lucille Matthews #2 which was drilled on the Company’s leasehold block Precilla Graham A-753 and the Electrothermic PC JV Matthew Ranch #3 located to the west of the block in the I & GN RR A-483 block. The total gross vertical interval for these two wells is 395 feet and 380 feet with a thickness of the lower high resistivity prospective interval of 180 feet and 160 feet, respectively.” 

The Report continues: “The field is also located in the middle of the Petrohawk Energy 87,000-acre Redhawk Eagle Ford lease block (average cost $200/acre) with a reported 350 BOPD discovery at Mustang Ranch.”

According to the RPS Report the reservoir quality of Eagleford Energy’s Matthews Lease is “comparable” to Petrohawk’s Redhawk field located six miles to the northeast. RPS reported the leasehold has an Eagle Ford Shale oil resource potential of 4 million barrels based on reported parameters from EOG (130 acre spacing unit) and Petrohawk (200,000 barrel oil recovery per well).

Matthews Lease San Miguel Sands Heavy Oil Target

The Matthews Lease is situated within the San Miguel sandstone heavy oil deposit in south Texas which is a large, well defined resource containing some 2 to 3 billion barrels in place as estimated by the Bureau of Economic Geology and The University of Texas at Austin in 1980 in a report entitled “Report of Investigations No. 107, Wave Dominated Delta System, Upper Cretaceous San Miguel Formation, Maverick Basin, South Texas”.

The Matthews Lease features past production. Railroad Commission of Texas (RRC) reports Historical heavy oil production of 99,000 barrels with most production during the 1960’s thru 1980’s. Production was halted due to low oil prices at the time.

The San Miguel formation contains 5 stacked sands including A, B, C, D1 and D2 with estimated original oil in place of approximately 150 million barrels.

According to a report entitled “Evaluation of Little Tom Field” prepared by A.L. Dawsey, Petroleum Engineer, dated March 2010, “There have been 40+ wells drilled in and around the Matthews Lease area, sufficient to delineate more than 2,000 acres of oil laden sands. The oil is producible, as the field has yielded near 100,000 barrels to date. Log, core and production data accumulated support the existence of five Taylor age reservoirs that contain approximately 150,000,000 barrels of oil. Numerous flood types and EOR techniques are available to adequately recover a profitable portion of this oil. With 67,444,000 barrels in the D1 sands, the field calculates in-place oil at 150,140,500 barrels.”

The RPS Report concludes:

• The area around the E. L. Brown Joseph L. Matthews #1 (Well Index No. 12) has structural closure (-2,050 ft TVDSS) and a 40 to 45 foot thick D1 oil net pay and is an ideal location for an EOR pilot project.
• The San Miguel formation has been penetrated by quite a number of wells, reducing the perceived risk of encountering a hydrocarbon accumulation to relatively low levels.
• RPS proposes cyclic steam stimulation (CSS) is the thermal recovery process most likely to provide economic recovery. 
• A previous steam flood was tried on the lease and injection was successfully achieved as well as oil recovered. The project does not appear to have been economic at the time in the late 1950’s. Note that a number of other steam injection projects have been attempted in the San Miguel formation in the area and were considered technical successes, lowering the technical risk.
• The 5-acre CSS Pilot is expected to recover 258.9 Mbbls of oil and generate a US $1,199 M NPV at a 10% discount rate. The BTAX ROR for the pilot project is approximately 17%. 
• The 5-acre full development plus pilot is expected to recover 6,843.5 Mbbls oil and generate a US $24,599 M NPV at a 10% discount rate.  The BTAX ROR for the expansion plus pilot project is approximately 15%. 

Development Strategy

• Drill one horizontal test well to the Eagle Ford Shale on Matthews Lease
• Drill one vertical test well through the Eagle Ford Shale on Murphy Lease
• Log, core, analyze and compare petrophysical data
• Roll out multi-well exploitation program
• See “Reports” for More Information