King Cotton Prospect

Description:

AC Exploration has obtained 480 acres of leases covering the prospective area known as the “King Cotton Prospect”. The Prospect lies in the SE ¼ of Section 18 and the west ½ of Section 17, 3S, 17W.

Key Well:            

A key well for this Prospect is the TriC #1 Shelton Trust, which lies 5,625’ SE of the Proposed Location for the King Cotton Prospect. The Shelton well was drilled in 2017 as an exploratory well, testing a small, structural closure indicated at that location. Mud log shows and reservoir-quality rock were encountered in both the Strawn and Chappel Lime objectives.

Pipe was set only to the base of the Strawn (5,091’), with the lower part of the hole left uncased. An open-hole completion was attempted in the Chappel Lime from 5,091- 5,603’. The interval was acidized and swabbed back, with no shows of oil or gas, only drilling fluids and water. Porosity in this interval ranges from 4-6%, with resistivities of 30-100 ohms. Water saturations in the upper section calculate 30-40%, increasing to over 60% in the base.

Two nearby wells with similar Chappel zone developments have each yielded over 25,000 BO per well. These are the TriC #1 Varner and the AC #1R O&O Ranch; both of which were drilled on similar features; small closed structures. The negative results from the Shelton well suggests that the acid went into the wetter, lower portion of the Chappel, due to the large open interval that was stimulated.

After the unsuccessful test in the Chappel section, the Operator plugged back and moved up hole to test the lowermost of two basal Strawn Conglomerates that were present. This zone had a mud log show of more than 2,500 units, but only 5’ of porosity of 8%, or better.  This zone was perfed, acidized with 500 gallons of HCL through perfs 5,064-74’. Very little fluid, or pressure was recognized from this zone and after one day of testing, the decision was made to move further up hole.

The uppermost of the two Strawn conglomerates in the Shelton well had 14’ of net pay developed with 8-14% porosity and 6-10 ohms of resistivity. This sand also had a mud log show of over 3,000 units of gas. It was perforated from 5,016-5,031’ and acidized with 1,000 gal of acid. It came in flowing 100% oil at a rate of 25-35 BOPD. It is still active, having made of 8,900 BO, so far. It now makes about 2 BOPD with another 1-1.5 BWPD. 

Seismic:

Looking at Summer Moon 3D data through a seismic stratigraphy software package known as Paradise provides a significantly enhanced picture of both the Chappel Lime and the Strawn Conglomerates. Paradise is designed to “learn” which seismic attribute  best characterizes the various production found within a basin or play area. Paradise then searches the entire data volume looking for areas these specific attributes may occur.

With Paradise, we have been able to identify the seismic attributes, or “key neurons” that are represent the Chappel and Strawn zones of interest in the Shelton well and others like it. The areal extent of the trap defined by these neurons covers an area of less than 25 acres for each zone. The limited drainage area explains why neither zone has proven to be commercial in this well bore.

Prospect:

The Prospective Area for King Cotton lies on strike with the Shelton Trust well. It is clear that all of the key neurons for the Chappel and the Strawn are present within this anomaly, which covers more than 400 acres. The morphology and depositional setting of the anomalous area is consistent with a shelf-sand type of deposition. Both zones have previously been found to be commercially productive in this depositional setting.

The Proposed Location will evaluate two separate, but overlapping anomalies corresponding to the Strawn and Chappel zones of interest. Both zones are expected to be present, with thicker porous intervals and greater areal extent than were present in the Shelton well.

Reserves:

The Chappel Lime recoveries in the area range from 25 BO/AF to more than 100 BO/AF. Assuming 320 acres of productive area with an average net pay of 20’ and a conservative recovery factor of 50 BO/AF, a well with 40-acre drainage can be expected to recover about 40,000 BO. Prospect totals reserves for the Chappel Lime are put at 320,000 BO from the Chappel (8 wells).

Strawn recoveries range from 100 BO to as much as 175 BO/AF. With 10’ of pay and 40-acre drainage, a Strawn producer could be expected to recover 75,000 BO (125 BO/AF). With an indicated productive area for the Strawn covering 565 acres, for a total Strawn reserve target of 1,050,000 BO (14 wells).

Trade:

AC has acquired full-interest leases covering 480 acres on the King Cotton Prospect. Participants will be subject to the following terms & conditions:

a)            $250/ac for a 77% NRI assigned interest in the leases (8/8 ths)

b)            G & G & Seismic Costs of $60,000 (pro rata to the 8/8 ths WI)

c)            One-Quarter (¼) Carried WI to Casing Point (8/8 ths)

d)            After Casing Point, all parties will be on an actual-cost basis

Proposal:

AC will sell up to a 40% WI in its’ King Cotton Prospect, operating the test well to a PTD of 5,400’ at a location that is approximately 805’ from the West line and 940’ from the South line of Section 17, 3S, 17W.