Northwest Placedo

Victoria County, Texas

Pipeline Resources, Inc. recently acquired leases covering a total of 295 acres in the Northwest Placedo area of Victoria County, Texas. The area is located within a portion of the Frio Trend unequaled for its prolific oil and gas. Structurally, the area is situated within the Sam Fortyce – Vanderbilt Fault zone that created abundant structural traps ranging from large anticlines to very subtle fault closures. Depositionally, this portion of the Frio Trend is commonly referred to as the Grera-Caranchua Barrier Strandplain System, characterized by extensive deposition of highly porous and permeable sands that serve as excellent quality reservoirs. This combination of structural depositional elements made this portion of the Frio Trend a premier producing area for over 60 years. It remains one of the most attractive areas for additional development along the Texas Gulf Coast. 

The prospect acreage was acquired for the purpose of evaluating a small (approx. 300 acres) but well defined 4-way closure apparent on proprietary 3-D seismic data acquired across the area. The anticlinal feature occurs on the downthrown side of the major “down-to-the-coast” fault that sets up the very prolific Placedo, East Placedo, Keeran, North Keeran, and Koontz Fields. The area immediately surrounding the prospect acreage is highly complicated by an abundance of minor faulting that creates a setting very similar to the Eloise, Palo Alto and Una West Fields which lie to the northeast. 

3-D seismic data and available geologic information for the prospect correlate favorably. On the seismic data, the targeted structural anomaly is very well defined at the base of the Frio formation at about 7500' and extends up through the section to approximately 6600'. Subsurface control from wells drilled in the area in the 1940’s and 50’s is consistent with the seismic and confirms the structural interpretation. Numerous sands encountered in these wells appear productive by electric log interpretation and, in some instances, were cored oil and/or gas productive. These sands correlate with sands developed in similar structural settings along trend. Several sands above 6600' also appear productive. These possible hydrocarbon accumulations serve as secondary targets. 

The initial test well for the prospect is scheduled for early 2010 and will be drilled on the approximate crest of the structural feature. This well will be evaluated to better determine the potential of the numerous target sands. With the assumption that most of the targets are confirmed productive, reserves of as much as 1-3 Bcf of gas, and 300,000 – 500,000 Barrels of oil or some combination thereof are considered reasonable. Based on the data available, it is expected a total of three to five wells will be necessary to develop the prospect's reserve potential.