Martin County
Martin County
The properties are situated in the south-central portion of Martin County approximately 32 kilometres northeast of the city of Midland, Texas in an area where there is easy access and no adverse environmental conditions.
Motherlode Project
Advance Energy Limited's Mother Lode 3-D Project is located just north of Midland, Texas, in the north-central portion of the Midland Basin. The project covers 250 square miles of 3-D seismic data located in the northern part of Midland County, the central portion of Martin County, and the southern part of Dawson County.
To date, there have been 18 wells drilled on prospects generated from this project and 17 have been completed as producers for a success rate of 94%. Advance Energy Limited is participating in three phases of this project as described below.
Phase I - Homestake and RKE Prospects
In May of 2005, the Company acquired a 22.5% average Working Interest (17% average NRI) in five wells producing from the Strawn Limestone. From May 2005 to February 2008, the Company participated in five successful workovers and in the drilling of one development well.
Advance has recently entered into a contract to acquire an additional 67.5% operated working interest in this project with an effective date of March 1, 2008. This will give the company a controlling 90% interest in this project and we plan on four workovrs and three new drills in 2008 and 2009 that will lift this asset to an estimated 500 BOEPD. Phase II-Totem Prospect
In July 2006 Advance Energy Limited began participating for 12.5% in the development drilling of the 640 acre 3-D defined Totem Prospect. During the course of 2007, the Company participated in the successful drilling and completion of the Strain 16-3 and Strain 16-4 wells on this prospect.
Although these wells have a large first year decline, the Company has been able to offset the decline and add net production thru its successful drilling program. Advance Energy Limited expects to participate in the drilling of four more wells on this prospect over the next 18 months.
Phase II-Key East Prospect
In July of 2006 Advance Energy Limited participated in the drilling and successful completion of the Prudie Brown 10-1 well on the Key East prospect. This well first produced in January of 2007.
In May of 2007, Advance Energy Limited acquired a 12.5% working interest in an additional three wells on the Key East Prospect and the rights to participate in the development drilling of up to nine additional wells. As of April 2008, one additional well has been drilled, completed and put on production and two other wells have been drilled and completed and are awaiting hook ups to production facilities.
The remaining 2008 development plans for these assets include the drilling of at least two more development wells and a workover in one well to correct a salt water production problem.
Phase III
In the 2nd quarter of 2007, the Company entered into a joint venture agreement to co-develop prospective acreage in Martin and Dawson Counties, Texas. This project, Motherlode Phase III, consists of 75 square miles (48,000 acres) of 3-D seismic data that has been shot and interpreted. The initial interpretation suggested multiple prospects that would target eight prospective deep reservoirs (wells within the 75 square miles have made in excess of 1,000,000 BOE per well) while being able to infill drill the shallow Spraberry Field.
The Company commenced leasing targets in September 2007 and by the end of the year had the first target 100% leased and were in final negotiations on the second and third prospects.
The development plan for this project for 2008 is to drill and test the first three prospects and continue to lease the next set of prospects. Each time a new discovery is made it will set up an additional one to three development wells.
This project will allow Advance to become a major developer of proven reserves in one of the world's most prolific producing basins. Further, by utilizing current technologies, Mothelode Phase III will position Advance to discover new reserves that could substantially increase the reserve estimates for the project.
