Big Whammy Prospect

GENERAL GEOLOGY
AUSTIN CHALK, PEARSALL FIELD
ELLSWORTH #1 EWALD
FRIO & LASALLE COUNTIES, TEXAS
132.01 ACRES (75% NRI LEASE)
DRAINHOLE LENGTH: 2145’
PRIMARY PRODUCING ZONE:
AUSTIN CHALK FORMATION B-1/B-2 ZONES
PROPOSED METHOD OF LIFT: BEAM PUMP

Pearsall Field, a large field in South Texas, covers portions of Frio, LaSalle, Dimmit, and Zavala counties. It produces primarily from the Upper Cretaceous Austin Chalk Formation. With the first production established in 1936, the field has a cumulative production of 137,609,258 BO and 89 BCF to date. The rock is typically a dense impervious, micritic limestone in which production is dependent on secondary porosity and permeability created by fractures. The field is located downthrown to the Balcones Fault Zone, and is not influenced by major faulting like other Austin Chalk Fields, such as Giddings Field. The structure in Pearsall Field is a regional anticline trending northeast-southwest with very little closure. Therefore production is not due to structural entrapment within the anticline, but is related to fracturing within the Austin Chalk due to the upward arching in the anticline.

The fractures are predominately vertical and occur in an en echelon pattern trending generally northeast-southwest, or parallel to the axis of the anticline. Therefore, it is easy to envision how a horizontal drainhole can enhance production from this reservoir, thereby intersecting many fractures by drilling perpendicular to strike.

The Ellsworth #1 Ewald is a 2145’ horizontal well drilled by Ellsworth in 1989. The well was completed with an initial potential of 654 BOPD, 275 MCFD, 220 BW, 380# FTP on a 48/64” choke. The cumulative production through 1998 was 222,061 BO and 151,940 MCF and 310,141 BW. The enclosed cross section illustrates the traverse of the lateral drainhole with the major show intervals marked. The well was basically a traverse through the B-1 and B-2 sections, which is considered the known pay zones in the area. The #1 Ewald Well is a good candidate for the acid frac treatment in that 2145’ of the drainhole is concentrated in good fractured rock.

The current drainhole is concentrated in the B-1 and B-2 zones with most of the well in the B-2 zone; only 490’ of the well is concentrated in the B-1. There is excellent history of B-1 production in the area as well as good mud log shows in the existing well in the B-1 zone.

The HPE #1 Ewald lease is situated where offset drainage is negligible. To the east the acreage had title problems and was not drilled. To the southwest the acreage is Mobile fee acreage, and they have chosen not to drill or lease the acreage. Therefore future oil recovery from this lease should be excellent as well as future drilling potential.

The pumping history of the HPE #1 Ewald is as follows;

1.) In 1990 the well was put on submersible pump (operated by Ellsworth).
2.) In 1991 the well was put on 456 Darco beam pump (operated by Ellsworth).
3.) In March 1996 the well was put back on submersible pump (operated by Express Oil & Gas). The well was pulled too hard and the fluid level dropped below the submersible pump and it burned up. In 1998 the submersible pump and tubing were pulled from the well and it has been S/I ever since.

It is our opinion that massive quantities of fluid were pulled from this wellbore (on submersible pump twice) and that a limestone drilling fines accumulation has built up in the drainhole. This well has never been cleaned out or stimulated with acid. Our objective is to clean out the drainhole and perform a 60,000 gallon 15% HCL acid frac on this well. Ellsworth has applied the “acid frac” on two (2) wells in this immediate area with fantastic results. The HPE #1 Carroll and the HPE #1 Walls wells were treated with the 60,000 gallon 15% HCL acid and diverter fracs (see Exhibits attached with BJ Acid Frac Procedure).
The wells exhibited a dramatic increase in production, in their first month of production (post frac), in excess of 600 BOPD, and up to six months of flush production. For the entire year of 1996 when Express Oil & Gas put a submersible pump on the #1 Ewald well it averaged 64 BOPD and 66 BWPD; keep in mind that this production was from a plugged up drainhole, absent of acid frac stimulation. A fluid level on the HPE #1 Ewald was taken on approximately 5/19/2005 and fluid was tagged @ 1994’. There is currently no market for casinghead gas that will be produced from this well. The HPE #1 Ewald will qualify for a severance tax exemption (4.6% on oil) because the well has been inactive for over two (2) years.

Partners

Pipeline Resources, Inc.
P.O. Box 1969
57 FM 3356
Van Alstyne, TX 75495
Phone: 800-523-1560

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