Strawn Oil Project
Blackstone and Mosman each acquired 50% equal Working Interests in Strawn; with Mosman Operating LLC acting as Operator on the Project per the Strategic Alliance. Strawn is located in Young and Archer Counties, Texas, approximately 200 km west of Dallas; and consists of 27 existing wells, most of which are not currently in production due to recent lower oil prices and historic low levels of maintenance (6 are currently producing). The Project is some 1,300 acres spread over 7 established leases which are documented in accordance with local requirements. As reported by Mosman at time of acquisition, the leases did not have a resource identified though production on the leases by the vendor since 2003. The Strategic Alliance has commenced a detailed program of maintenance and workovers in order to increase the current rate of oil production, as the wells were producing just five barrels per day at acquisition. The Project has previously produced at rates of over 600 barrels per day and has certain production facilities in place. Assets include equipment such as pump jacks, small tank farms and other infrastructure which were included in the acquisition price. The total joint acquisition price for 100% of the project was $150,000 with each Working Interest Partner having a 50% ownership. Total transactional costs to Blackstone included an additional approximate $30,000. Approximately $150,000-$300,000 will be jointly spent in first year of operations on the maintenance and site workover plan. Blackstone intends to fund additional Strawn working capital if needed from Use of Proceeds of this offering. In order to assess the resource potential on the leases, the JOC technical team will examine aspects of the Project by applying a number of modern exploration techniques, which had not previously been exploited. The leases are “held by production” and typically Working Interests in these type of projects continue as long as revenue exceeds operating cost; which is mainly a function of budgeting in operations and variable oil prices. Based on current production ranging from 10-20 barrels per day, JOC anticipates the field will produce for the foreseeable future.
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