Molori Energy ("Molori" or the "Company") currently owns a 25 percent working interest in certain leases located in the bifurcated Texas panhandle owned by Texas-based independent oil and gas producer Ponderosa Energy, LLC ("Ponderosa").
Today, the Company has 165 producing (PDP) wells and an inventory of approximately 202 non-producing wells (PDNP) for a total of 367 wells. The Company will RTP ("Return To Production") the PDNP wells by performing simple re-works or re-completions which will include among other actions: replacing broken rods/tubing, steaming paraffin, performing chemical and acid treatments, repairing mechanical issues on pumpjacks, repairing flowlines, and repairing electricity and salt water disposal infrastructure. As a result, the Company has realized an average workover expense per well of approximately USD $12,000. These RTPs have demonstrated average production increases of 2.4 boepd/PDNP, resulting in an average cost per flowing bbl of USD $5,000/flowing BBL. When the assets were acquired in June 2016, the aggregate 8/8ths production was 40 BOEPD. As of February 2017, production increased to 435 BOEPD through the RTP program and acquisitions.
The assets include low-decline, PDP weighted reserves primarily in the West Panhandle Field of the Hugoton Basin of Texas. The assets are approximately 50% oil and 50% liquid rich gas (HIGH BTU premium gas) primarily located in Carson, Gray, and Hutchinson Counties of District 10.
The approximately 24,000 net acres currently owned by Molori Energy are all held by production. Molori Energyimplemented a consolidation strategy to aggregate large leaseholds with inactive wells containing economic reserves, all with low decline rates, and low geological risk. As the Company returns to production these wells, it leverages economies of scale from shared infrastructure and overhead to reduce the lease operating expenses per boe.
Working Interest Partners
The latest NI 51-101 reserve report commissioned by Molori and effective January 1, 2017, covers 66 of the leases in which Molori holds a working interest. Work is ongoing in a further 13 leases owned by Molori and Ponderosa, but not covered by this report. It is anticipated that the leases not covered by this report will constitute part of the next NI 51-101 presently being prepared on behalf of Molori and Ponderosa.
In summary, the initial projected average production was 40 barrels of oil equivalent per day ("BOEPD")* in June 2016, when Molori made its first investment into Ponderosa. For the month of January 2017, production averaged 280 BOEPD, a 600% increase in daily average production. This production increase is due primarily to an aggressive work-over plan employing working capital committed by Molori to return non-producing wells to production, while keeping Lease Operating Expenses low due to tight cost controls and already established management.
Further, the initial NI 51-101 dated April 1, 2016 resulted in USD$5.15 million of 1P (Total Proven Reserves) consisting of US$1.25 million PDP (Proved Developed Producing) and USD$2.89 million PDNP (Proved Developed non-Producing). The new updated NI 51- 101 dated March 08, 2017, effective January 2017 and prepared by Amiel David, Ph.D of PeTech Enterprises Inc, has resulted in USD$26.9 million 1P (Total Proven Reserves), a 420% increase, including USD$16.26 million in PDP and US$10.65 million PDNP. The resulting increase is a result of a successful work-over plan, and the fact that Ponderosa had as many as 10 work-over rigs employed during much of that time.
- All numbers are in USD
- Molori Interest is 25%
* Per BOE amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 MCF) of natural gas to one barrel (1 bbl) of crude oil. The BOE conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of natural gas as compared to oil is significantly different from the energy equivalent of 1:6, utilizing a conversion on a 1:6 basis may be misleading as an indication of value. The ratio of gas to oil was 70% gas and 30% oil in June 2016 and 40% gas and 60% oil in January 2017.
Molori’s strategy has been to engage in low-risk well reactivations in the Texas Panhandle to generate steady cash flows. Over 60 wells have been reactivated to date, producing from the prolific Brown Dolomite formation. Molori and Ponderosa have generated USD$16 MM NPV-9% of discounted cash flows from this strategy with USD$2.5 MM of capital investment including infrastructure. The low-risk recompletion strategy has given Molori the opportunity to pivot into higher-growth strategies.
Ponderosa and Molori have identified a development opportunity in the Red Cave formation. The formation is prevalent throughout its leases at a shallower depth of 2,100’ to 2,300’. Improved fracing technologies and completion techniques have demonstrated the Red Cave to be an economic development target. The Red Cave has been developed since the 1950’s but was not considered to be a high value target because of inadequate historical technology. Similar to the Permian Basin, new technologies have unlocked the reservoir to generate economic reserves and production in present day.
Molori has aggregated acreage in the play and will continue to add inventory in the coming months. After reaching further milestones in the Brown Dolomite reactivation strategy, the combined companies will test development to the Red Cave zone, which if successful, will add hundreds of economic drilling locations to the already robust inventory of PDNP wells.
Domestic onshore shallow conventional low risk development play
Latest Company News
MOLORI ENERGY'S THOMPSON 23-1R WELL FLOWS OIL 02/22/18
MOLORI DRILLS 48 NET FEET OF PAY IN RED CAVE 23-1R WELL 01/22/18
MOLORI SPUDS RED CAVE APPRAISAL WELL 12/13/17
MOLORI ACQUIRES 11,000 ACRES WITH RED CAVE ACCESS AND PLANS TO DRILL 8 WELLS AS OPERATOR 10/26/17
MOLORI STRIKES DEAL INCREASING WORKING INTEREST TO 50 PERCENT AND SECURING AN ADDITIONAL USD$7.5 MILLION IN RESERVES 10/17/2017
MOLORI PROVIDES UPDATE ON EXPLORATION PROGRAM 09/28-17
MOLORI ANNOUNCES UPDATE ON OPERATIONS AND RED CAVE DRILLING PROGRAM 09/13/17
MOLORI ENERGY ISSUES PRELIMINARY Q2 PRODUCTION RESULTS
MOLORI ANNOUNCES CLOSING OF PRIVATE PLACEMENT
MOLORI ENERGY PUBLISHES UPDATED NI 51-101 REPORT DEMONSTRATING FURTHER GROWTH IN RESERVES 05/04/2017
MOLORI ENERGY PLANS TO DRILL RED CAVE FORMATION; ANNOUNCES PRIVATE PLACEMENT OFFERING
MOLORI ENERGY ADDS TO PRODUCTION
MOLORI ENERGY PUBLISHES UPDATED NI 51-101 REPORT AND DEMONSTRATES 420% INCREASE IN RESERVES
MOLORI ENERGY INC. ACQUIRES ADDITIONAL PRODUCTION
MOLORI ENERGY INC. PROVIDES OPERATIONAL UPDATE AND YEAR-END RESULTS
MOLORI ENERGY INC. PROVIDES OPERATIONAL UPDATE AND YEAR-END RESULTS