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|   | | Marsh Island and Inland Waters Projects
The Company's Marsh Island project, located in Iberia Parish, Louisiana, is newly opened acreage in a prolific producing area, which is virtually unexplored. Recent new discoveries in the vicinity include the Mound Point, Lake Sand and W. Cote Blanche fields with a total estimated, from available public records, 11.5+ trillion cubic feet of gas equivalent ("TcfGE"). The Company closed the acquisition of all the issued and outstanding membership interests of Summit Energy Company, L.L.C. ("Summit"), which held an 18.1634% interest in the Marsh Island project on February 20th, 2007. The Company subsequently acquired an additional 17.4175% participating interest in the Phase I Area of the Marsh Island project for a total participating interest of 35.5809%.
The 35.5809% participating interest is in a 109 square mile portion of lands and water bottoms (the "Phase I Area") governed by an Exclusive Geophysical Agreement (the "EGA") with the State of Louisiana. A 6.25% participating interest is held in the remaining lands covered by the EGA (the "Phase II Area"). The Company has an exclusive leasing option to acquire 18,158 acres within a 90,000 acre AMI (area of mutual interest) that is surrounded by producing gas/condensate fields. On state water bottom lands, the maximum of 8,158 acres has been selected. The Marsh Island land selection, of a maximum of 10,000 acres, is due to occur towards the end of March, 2007. The Company was the successful bidder for 16 tracts of land in the State of Louisiana oil and gas lease auction held on February 6th, 2007. The successful bids cover 4,004 acres of shallow water leases in the Marsh Island project area bringing the total gross number of acres held by the Marsh Island Project Group to over 12,161 total acres of which Bayou Bend (operator) will hold a 35.5809% working interest. In late 2005, Summit acquired 109 square miles of 3D seismic and interpretation has identified numerous prospects. The seismic survey was designed with cutting edge parameters for state of the art amplitude versus offset and amplitude versus angle analysis. Careful data processing was a prerequisite and a highly experienced team of consultants was assembled to execute the plan. Ultra long offsets were designed to 60,000 feet with 14 second record length and 110 foot x 110 foot bin size. The acquisition targets are located in a highly prolific gas prone Miocene trend ranging from the Tex L series (+/-10,000') through the Gyroidina sand (+/- 20,000'). The seismic survey was situated between the Mound Point, Lake Sand and Cote Blanche Bay fields. Over 24 prospects with considerable size potential have been identified on the new 3D seismic and the Company has commenced an aggressive drilling program. It is anticipated that multiple rig years will be required to exploit the extensive prospect inventory.
In addition, the Company has a 35.5809% interest in the 40 MMcfgpd El-7 production facility, which is tied into the existing regional pipeline infrastructure. This asset has the potential to accelerate production timing and reduce capital costs upon successful completion of the exploration program. The facilities were damaged in the August 2005 hurricane and requires refurbishment. The purchase of the State Lease 16194 in the Eugene Island Block 7 that contains the El-7 production facility also has two shut-in wells that produced gas and condensate from the Textularia "W" Formation. An independent NI 51-101 resource estimate on the Phase I Area has been completed by Petrotech Engineering Ltd. Click here to view report. In April, 2007 the Company entered into a Participation Agreement for oil and gas exploration rights on 2,899.9 acres, which includes the large LaPosada prospect, located in Iberia and Vermilion parishes, Louisiana. Bayou Bend will fund 25 percent of the costs of drilling the initial well on LaPosada to earn a 21.875 percent working interest in this first well and all future wells located on the associated acreage. The LaPosada prospect is located in the Bayou Hebert Field and will be drilled and operated by Petroquest Energy. The prospect is a Lower Miocene deeper pool test on a high relief fault closure that has produced over 100 BCF from shallower Middle and Lower Miocene sands. In June, the Company was the successful bidder on an additional 10 tracts of land in the State of Louisiana oil and gas lease auction. The bids cover 2,170.47 acres of shallow water leases in the Marsh Island Project Area, in which the Company has a 35.5809% interest, bringing the total gross number of acres held by the Marsh Island Project Group to over 19,170 total acres. In April 2008 the Company entered into a Joint Exploration Agreement ("JEA") with Contango Operators, Incorporated ("Contango"), Republic Exploration, LLC, CGM and their partners (collectively the "Contango Group") to contribute acreage and jointly drill and develop the Company's Marsh Island Phase 1 area Eagle's Nest Prospect located in Eugene Island Block 6 of the state waters of Louisiana. This prospect is a possible northern extension to the Mary Rose discovery previously announced by Contango. The Company and its Marsh Island Phase 1 partners will together hold a 35% working interest position in the JEA covering portions of State Leases #18860, #19261, #19155, and #19266. The Company itself will hold a 12.453525% working interest position in the JEA. Contango will operate the initial well to be drilled on SL#18860 to a depth of 15,900' and, if successful, production will flow through Contango's H Platform Facilities in Eugene Island Block 11. Please click here to view Work Programs. Work Programs |
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