Arkoma Stacked Pay Project
Arkoma Stacked Pay Acquisition- The Arkoma acquisition has been structured to secure initial Working Interests and Options to acquire additional Working Interests over time. In 2017, Mosman closed on an acquisition of the initial 10% Working Interest in the Arkoma Stacked Pay Acquisition (Arkoma) located in Okfuskee County, Oklahoma for a consideration of $500,000. As a condition of the transaction, Blackstone acquired an Option until March 31, 2018 to purchase up to 45% Working Interest in Arkoma for $1.5 Million, which has since been amended to allow Mosman and Blackstone to each retain Options to purchase up to 33% Working Interest for a total of $1.2 Million each. As of April 1, 2018, Blackstone has purchased 7 ½ % Working Interest for $218,750, and retains additional Options exercisable at Blackstone’s discretion, in incremental payments throughout 2018 to increase its Working Interest ownership percentage; to be funded by Use of Proceeds of this offering. The seller, Inland Oil & Gas Corporation and Inland Operating Company, will retain a minimum 33% Working Interest and remain as Oil & Gas Operator. Inland estimates the gross reserves and resources of the surrounding area to be 8.48 Million barrels of oil, based on 3D seismic estimates by the previous owner which were used to identify a significant geological structure. Additionally, the wells drilled to date have demonstrated multiple reservoir horizons. Mosman Operating, LLC has conducted initial technical due diligence and has commissioned an independent reserves and resource report to compliment the seller/vendor estimates. As consideration for closing an initial 10% and securing the Blackstone back-end Options to purchase up to 33% Working Interest, the Company paid Mosman a $100,000 Facilitation Fee at completion of the Initial Transaction on May 26, 2017. The Blackstone/Mosman alliance also retains a First Right of Refusal on any other projects in the 36 square mile 3D seismic area owned by Inland, where five other targets have been identified. As reported by Mosman and Inland operating, details of the Arkoma Stacked Pay Project include 3D seismic survey over a larger general area which led Inland to focus on the 400 acres forming the Arkoma Project. The seismic enabled the mapping of an uplifted NE-SW horst block with eight stacked reservoirs. The primary reservoir is the Wilcox sandstone at approximately 4,000 feet. Additional shallower oil and gas conventional pay zones include the Viola, Cromwell, Union Valley, Gilchrist and Booch sands, and two “tight gas” shales including the Woodford Shale. The Arkoma Project includes surface leases, five production wells, a water disposal well, production infrastructure, seismic and other data. Inland Operating currently operates the field. The first deep well in the area, Wise 1-25, was drilled in 2015. Initial flow rates were up to 85 barrels of oil per day. Production has been constrained as there was no water disposal well, but this well has already produced over 350,000 barrels of oil, and recently produced 20 barrels of oil per day. There is existing onsite infrastructure which includes roads, pumps, separators, tank batteries, three phase electrical power and a connection to a gas pipeline. In 2018, Mosman and Blackstone have ordered additional reports in an effort to update/verify data provided herein.
The Blackstone/Mosman Strategic Alliance deliberately negotiated the acquisition in stages so that; a) further work can be performed to update reports and to ensure compliance with SPE definitions; b) production from existing wells can be extended before Blackstone/Mosman decide to exercise purchase Options; and c) further due diligence can be completed.
The Inland Assets are comprised of Leases, Wells and Unitizations including:
• 100% of a water disposal well.
• 100% of the three phase power supply lines.
• Infield oil and gas gathering systems owned to be in proportion to Working Interests.
• The geological data base covering the total project 400 acres.
• The 36 square miles of 3D seismic which Mosman Operating and the Joint Venture have access to through the included First Right of Refusal on any projects in the 36-square mile 3D seismic data owned by Inland, (where 5 other targets have been identified).
• The leases are held by production and there is no minimum work requirement. As the wells are all recently drilled, there is no imminent inherited abandonment liability.
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