ASX-listed US onshore specialist TTE Petroleum Ltd has signed a Purchase and Sale Agreement 2016 with US independent Viceroy Petroleum LP which will help it move forward with its oil and gas development plans.
As part of the alliance, Viceroy will assume operatorship and acquire a 70 per cent working interest (W.I) in the Allen Dome field (which includes the acquisition of the 50 per cent W.I currently owned by Gulf South Energy Partners LP and Gulf South Holding Inc). TTE will retain a 30 per cent W.I in this field. In addition, Viceroy will purchase the Boling Dome and Markham Dome Assets from the Company.
TTE will retain Overriding Royalty Interests across all three fields, all of which are located in Texas.
The sale of these fields will result in TTE net approximately US$824,000.
Viceroy is expected to commence an immediate workover program on Allen Dome, focused on the uphole recompletion of the existing wellbores drilling by TTE during the 2015 drilling programme.
The companies are also investigating the sales potential of Allen Dome gas.
The TTE & Viceroy joint venture will commence an immediate workover program to address re-completion of the JT Reese and Rosalee wellbores at Allen Dome.
TTE said a number of the wells are overdue for recompletion and are still producing from the first zone in the well, with numerous unproduced cored-oil pays stacked above. Recompletion of untested zones in these new wellbores is both low risk and low cost (less than 10 per cent of drilling a new well). Re-completions are considered routine maintenance on salt domes in order to exploit the number of overlying undeveloped reservoirs seen in the wells.
The programme will involve the JT Reese 14, 15, 17, 23 and the Rosalee 5150 and has the potential to significantly increase production levels.
TTE said preliminary budgets indicate the programme will cost approximately US$250,000 of which TTE’s share would be US$75,000 and the work will take approximately three months to complete.
“Notwithstanding the volatility of oil prices, the joint venture believes that now is the ideal time to focus on increasing the revenue stream at Allen Dome. TTE will be working alongside Viceroy as the new operator to capitalize on the reduced completion rig and downhole services rates,” TTE non-executive director, Brad Simmons, said.
In conjunction with the new joint venture with Viceroy, a Board restructuring will see Darren Levy as non-executive chairman (previously executive chairman) and Brad Simmons as a non- executive director, relinquishing the role of CEO.
“I am ecstatic with the Viceroy relationship and their expertise. In our new role as a non-operator there is no further need for us to incur ongoing internal daily operational costs. Our 30 per cent share in an actively developing field has a much greater value than a larger interest in its current under-developed state. I am confident the Viceroy team will take
Allen Dome to the next level of success and that TTE will benefit significantly from this alliance,” Mr Simmon said.