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Palo Pinto County

The Palo Pinto project lies along the western part of the Fort Worth Basin, a prolific oil and gas producing region of east/centre Texas. It is characterised by natural gas and minor oil accumulations in stratigraphic and structural traps associated predominantly with early Pennsylvanian quartz sandstones and conglomerate reservoirs.

Palo Pinto County - Lone Camp Project (Sold 2008)

In February of 2006, Advance Energy Limited acquired a 71.5% average Working Interest (53.625% average NRI) in nine producing gas wells, one salt water disposal well and a 90.0% interest in a five mile natural gas transmission line. The 1,280 acre project is located in the eastern portion of Palo Pinto County, Texas approximately 50 miles west of Fort Worth, Texas.

The project was acquired for US$1.282m using 100% debt provided by Sterling Bank of Texas and sold for US$2m in December 2008 after producing over 150,000 MCF of gas and US$1.189m in revenue net to Advance. Since acquiring the project, Advance increased production from 250MCFD to 430 MCFD by workover and drilling activity at a cost of only US$254,000. The sale of the project delivered an annual unlevered IRR of 53% and a leveraged IRR of over 100%.

The sale of Lone Camp is the Company's first completion of a project ownership cycle and proves the business model of acquire, develop, produce and divest and delivers an outstanding project return despite the recent downturn in energy prices.  

Palo Pinto County - Possum Kingdom Project

In December 2006 Advance Energy Limited purchased an average working interest of 90% in the nine well, 1,015 acre Possum Kingdom project located in Palo Pinto County. This working interest was increased to 100% (average NRI 79%) in August 2008.

The company performed a number of workovers on the project in 2008 stabilising production at approximately 335 MCFEPD by the end of the year.  All other development plans for these assets have been tabled until the prices for goods and services stabilise.