On June 14, 2012, Global Earth Energy, Inc. executed a Joint Venture Agreement with Western Energy Group to develop the Smith-Needham prospect located in Gonzales County, Texas. Western Energy Group is engaged in the onshore exploration and development of oil and natural gas. With over 60 years of combined experience of the key team members, Western Energy Group believes it is well positioned to identify, operate, enhance and prudently acquire properties that have current production and strong recompletion/workover opportunities.
The Smith and Needham leases are located in the Austin-Chalk trend of Gonzales County, Texas. The area is in one of the most active oil shale trends of the decade known as the Eagle Ford Shale.
Wells and Leases: Smith and Needham Leases
There are a total of approximately 680 acres of leasehold interest with multiple drilling locations identified and two active oil wells located on 160 acres of the Smith-Needham prospect. Available interest is up to 75% working interest in the development acreage and the producing 160 acre Smith lease in the Smith-Needham prospect. We propose to first do a workover of the Smith No. 2 well whereby we hope to increase production from the current 10-15 barrels per day to up to 40 barrels per day. We plan on drilling two new 6,500 foot horizontal Eagle Ford oil wells.
The property features:
• Proven developed producing and behind pipe reserves (PDP, PDNP) in the Austin Chalk and Buda Formations;
• Multiple drilling locations identified in the Austin Chalk and Eagle Ford trends for future development with up to 250,000 barrels of oil recovery per well;
• Multiple pay targets and well diversity will provide us with enhanced risk management; and
• Estimated production after our proposed drilling program of up to 850 barrels of oil per day with estimated prospect reserves exceeding 1,000,000 barrels of oil.
In the early 1980s, Mitchell Energy, a Texas based company, began experimenting with hydraulic fracturing in a formation found in North Texas called the Barnett Shale. Like many other shale formations throughout the country, the Barnett was previously thought to be non-commercial due to the low permeability of the reservoir. Companies that had attempted earlier completions in these shale formations were ultimately disappointed by short lived production as the formations were simply too "tight" to allow for efficient reservoir drainage. Mitchell worked diligently to perfect a combination of horizontal drilling and hydraulic fracturing that would ultimately unlock the secrets of the shale. By the late 1990s, Mitchell's years of persistence paid off.
Once the economic viability of the Barnett Shale was established, the industry started to take a hard look at other shale formations encountered nationwide while drilling and producing conventional reservoirs. One such company was Houston, Texas based Petrohawk. The STS No. 241-1H, drilled in 2008 in LaSalle County, Texas, was the discovery well for the Eagle Ford Shale, located in over 24 counties and stretching over 400 miles from deep south Texas into the northeastern part of the state; the discovery of the Eagle Ford is changing the industry again. Western Energy Group and Global Earth Energy have teamed up to pursue and develop the Eagle Ford along the oil window in Gonzales County, Texas.