RNS Number : 6560G
Sefton Resources Inc
04 February 2010
Sefton Resources, Inc.
("Sefton" or the "Company")
Sefton Provides Year-End California Operations Update
and Reaffirms Credit Facility
4 February 2010
Sefton Resources, Inc. (AIM: SER), an independent exploitation and production company with assets in the East Ventura Basin of California and the Forest City Basin of eastern Kansas, today provides a year-end operations update and has completed its biannual credit facility review resulting in a reaffirmation of the facility.
Tapia Oilfield - East Ventura Basin, Calif.
Sefton continues with its field-wide cyclic steaming program that began in September 2009. The Company is currently steaming its eighth well and is on track to meet its internal two-wells per-month steaming schedule target. The results show an initial gain after steaming equivalent to a greater than four times increase over baseline production in the month following the steam-soak cycle. The well production returns to near baseline after three to four months of production. Sefton recently attempted two slightly larger 8,000 barrel steam injections to test production response in an effort to extend the life of the production cycle. Production data will be collected over the first three months of 2010 on these wells for this determination. Management continues to be encouraged by the results thus far.
Workover Activity
Sefton embarked on a workover program on the Hartje ¿16 well, the first of three wells that experienced corrosive liner failures. Well remediation is set to begin during the last week in February 2010, following the installation of a corrosion-resistant, stainless steel liner for the new completion. Company engineers expect the well to return to production by mid-February.
Corrosion treatment of the wells and tanks as well as additional measures to reduce corrosive activity is currently being implemented. Dye tracer studies conducted in the field concluded that corrosion was not due to recirculation of produced water through the field. Once the old liner is pulled from the Hartje ¿16 well, samples can be sent to the laboratory for further analysis on the source specifics of the corrosion which may be chemical and or biological.
Production
Estimated production for the fourth quarter of 2009 was approximately 11,268 barrels of oil (BO). Oil and gas sales for the three-month period totaled $715,000. The Company averaged 142 barrels of oil per day (BOPD)for the first part of January, with expectations of production increases by mid-February when the Hartje ¿16 well repair is complete. Additionally, the Hartje ¿ 18 has now been returned to production after steaming and is in the process of contributing increasing oil rates. Production due to steaming and repairs should return the Tapia Field to approximately 200 BOPD rate sometime in February.
Tapia Field Infrastructure Improvements Underway
Sefton completed its core steam piping project in early February. Piping includes natural gas, water supply and steam injection lines, as well as proper valves and fittings. At this stage, all wells in the core of the field are able to be steamed from four separate steam generator locations in the oilfield. Service to the single Lackie lease well and some currently shut-in wells on the south flank of the field should be added later in 2010.
Credit Facility Reaffirmed
Sefton also today announces that it has reaffirmed its reserve-based revolving line of credit facility with Bank of the West. The $10 million facility carries a borrowing base, reflecting the maximum amount that may be outstanding under the credit facility at any time. Almost $7 million currently is drawn and will next be reviewed in April, after year-end engineering and audited financials. Loans made under this revolving credit agreement are secured by mortgages on substantially all of the Company's oil and gas properties. Sefton's 2010 capital budget, which is currently under review by the Board of Directors, provides for a partial pay down out of cash flow of the existing borrowings under the facility.
The credit facility is available to provide funds for the exploration, development and/or acquisition of oil and gas properties, to refinance existing indebtedness and for working capital and other general corporate purposes.
Management Comment
Commenting on ongoing operations, Sefton's CEO Jim Ellerton said: "Our California steaming operations continue to provide us with positive test results, consistent revenues and reduced lease operating expense. We are taking the necessary steps to ready the field for the possibility of a continuous steam flood that can fully realize the Tapia Canyon Field's production potential. We are also pleased to have reaffirmed our credit facility which continues to provide us with financial flexibility in our ongoing oilfield activities."
Updated Presentation
Sefton also today announced that it has made available on its website an updated corporate presentation for access by interested investors and analysts. The presentation can be found by logging onto www.seftonresources.com.
Enquiries
John James Ellerton, CEO - Tel: 001 303-759-2700
David Charles/John Gaensbauer, Sierra Partners LLC - Tel: 001 303-757-2510
Nick Harriss/Derek Crowhurst, Blomfield Corporate Finance Ltd. (Nomad) - Tel: 020 7444-0800
Note: The information in this release has been compiled and reviewed by Harry Barnum, a Director of Sefton, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr. Barnum has Bachelors and Masters degrees in Geology and over 20 years of experience in the oil and gas industry. He is a registered professional geologist in the State of California.
Sefton Resources is an AIM listed oil and gas production company. Its main core area of activity is in the East Ventura Basin in California, where it owns 100% of two oil fields, Tapia Canyon (heavy gravity oil) and Eureka Canyon (medium gravity oil), both of which have over twenty years of expected production life. In addition, Sefton has over 45,000 acres in the Forest City Basin of Eastern Kansas where Coal Bed Methane gases, as well as conventional oil and gas deposits, are targets.
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