(MENAFN - ABN Newswire)
Talon Petroleum Limited (ASX:TPD) advises that the first well on the Roundhouse Project is expected to begin by early June. The well will be horizontal with a 5,500 foot lateral targeting the Cotton Valley Limestone. It is expected that the well will take about 25 days to drill after which it is planned to be fracced and tested.
Talon will have a 25% WI in the well and will acquire 600 acres of new leases at a combined cost of US1.65 Million to the Company. USA based O'Brien Energy Company will be operator with a WI of 75%.
The well is located between several vertical wells which have produced up to 80,000 barrels per well from the reservoir target of the Talon / O'Brien horizontal well.
In September last year (see Texon announcement of 27/9/12), Talon announced a deal from Tanos whereby Talon earned a 50% WI in the Roundhouse leases covering 7,038 acres or 3,519 acres to Talon's working interest.
Talon's share of the cost of the farm-in well in the Tanos deal at 50% WI would have been about US4 Million including the farm-in premium.
Since that time, an improved arrangement has been negotiated with Tanos and O'Brien.
Talon is no longer exposed to the 50% WI (US4 Million) cost well but will now participate in a Proof of Concept well at 25% WI for US1.5 Million.
Talon has also acquired 3,511 additional acres in close proximity to this well at a cost of US742,000.
As a result, Talon has increased its holdings from 3,519 WI acres to 7,380 WI acres at less overall cost than the original deal. Talon will have a 100% WI in 5,295 acres of the 7,380 acres.
The potential of Roundhouse will be tested by the upcoming June horizontal well.
If the well is successful it will be able to be brought on stream within 3 months and it will indicate the resource potential of Talon's Roundhouse holding. At 160 acre spacing per well, Talon's 7,380 WI acres could represent a resource potential of 10-15 million barrels to Talon's WI.