The Slack Heirs #1 located in Yazoo County, Mississippi approximately four miles north west of the established Pickens Field which, according to Mississippi Oil and Gas Board records, has produced approximately 25,000,000 barrels of oil. The Company reported in a news release dated February 21, 2006, that it has agreed to pay 100% of the drilling and development cost for the completion of the Slack Heirs #1 well currently estimated to be USD$400,000.00. Upon completion the Company will earn one hundred percent (100%) of the net revenue after operating cost and royalties until payout and fifty percent (50%) after payout.
A reserve and economical evaluation report was prepared by Fletcher Lewis Engineering, Inc., a qualified reserves evaluator in accordance with National Instrument 51-101 (NI 51-101) and the standards set out in the Canadian Oil and Gas Evaluation Handbook. The reserves estimates were functions of engineering judgment and interpretation, based on data available as of the effective date of the Report February 17, 2006. The reserves calculated by Fletcher Lewis for a 40 acre drainage area is 515,070 BBLS of oil which is classified as both Proved Undeveloped and Probable.
The proposed Slack Heir #1 is to be drilled approximately 600 feet east of the abandoned O’Reilly #1-21. The O’Reilly #1-21 was drilled in December 1981 to a depth of 10,002 feet and encountered a series of seven Cretaceous sands at a depth of 6412 to 7,500 feet. Two six foot intervals were perforated in the O’Reilly #1-21 and a production rate of 22BBLS per hour was produced for two hours on a ¾” in choke. The high producing rate of this test caused a pressure drawdown that caused water coning into the perforation and this well was abandoned. Even so, at today’s oil prices, this well would have been a successful producer from all Cretaceous pay sands. Analysis of the well logs and cores indicate the O’Reilly #1-21 has seven Cretaceous sands with 110 feet of net oil pay with an average porosity of 22.7% and water saturation of 49%. Analysis of a dipmeter log run on the O’Reilly #1-21 indicate that the Slack Heirs location should be in a superior position and at least 10 feet higher resulting in an expected 136 feet of net pay.