Company Overview
Precision Petroleum Corporation is an independent energy company engaged in the acquisition, exploration and development of oil and natural gas properties in the United States. Precision's objective is to seek out and develop opportunities in the oil and natural gas sectors that represent a low risk opportunity. As well, Precision aims to define larger projects that can be developed with Joint Venture partners.
Precision Petroleum Corp has entered into a joint venture agreement which grants the Company first right of refusal on a Montana based Oil, Gas and Coal property.
Phase 1 of this project is with a focus on developing an initial 1600 acre segment after an in depth engineering program. From data obtained by the engineering program results, this 1600 acre area is where management intends to drill the first 10 wells.
Projects
Thompson Project
The Thompson Project consists of an eighty acre oil and gas lease block in the E/2 SE/4 of Section 18-T4N-R1 W in Garvin County, Oklahoma. The drill site is supported by both 3-dimensional seismic and subsurface mapping with near offsetting control. The purpose of the prospect is to drill a direct north offset well to existing oil and gas production located to the south in Section 19-T4N-R1 W. The primary target reservoir is the Viola limestone with secondary possible horizons in the lower Pennsylvanian sands and the Bromide sequence of sandstones.
The improved structural picture of the Viola limestone has revealed several areas for development of the Pennsylvanian sands draped over the structures or pinching out as they on-lap. The oilfields within the survey area produce from the prolific Bromide sands of the Simpson series, Viola limestone and Pennsylvanian sands. Un-drilled locations within and offsetting these oil and gas fields are considered low risk due to the near proximity to production. The 3-D seismic data has proved to be very reliable development tools in the area because of the exceptionally consistent reflections and the many well bores for control.
Geological
Montana Oil Production
The Thompson Project is in the Pauls Valley Uplift geological province. The Pauls Valley Uplift is associated with the southwestern portion of the Hunton Arch. It is separated from the Arbuckle Uplift by the Mill Creek syncline to the south and slopes westward into the Anadarko basin. Individual structures on the Pauls Valley Uplift consist of anticlines, synclines, monoclines, and faulting of all styles. Many small to medium size anticlines and fault bound traps in this province have been developed to produce prolific amounts of Simpson oil.
It is common for these Simpson sands to contain from 450 to 1,000 barrels of oil per acre-foot and because of the active water drive; it is common to recover in excess of 80% of the original oil in place from these structural traps. These conditions also provide fertile hunting grounds for up-dip/attic oil reserves in the mature oilfields. Because of the water drive depletion, unrolled up-dip locations are still oil-filled and due to the large reservoir volume, very small areas can yield extremely prolific production. Many such structural situations have been identified in the Pauls Valley Uplift survey area.
Project Summary
The Thompson Project is located on the north flank of a paleo west- northwest faulted anticline that has been uplifted from the east by the Pauls Valley Uplift. General dip in the Pennsylvanian and Ordovician is to the northwest with an east-west south boundary normal fault that 3-D seismic indicates fault growth with depth. Producing horizons are the 1St Bromide sand and the Viola limestone with possible wrapping Pennsylvanian sands deposited on the lower north and west flank of the anticline. As mentioned earlier in this report, the purpose of the prospect is to drill a direct north offset well to existing oil and gas production of the anticlinal feature in Section 19. The current well pattern in Section 18 consists of standup eighty acre units.
Oil and gas production was first established within the Thompson Project in December 1985 when the Morris E. Stewart Oil Company drilled the Vashti #1 in the SW NW SW/4 of Section 19-T4N-R1 W. Initially completed as a 1St Bromide sand producer (19,545 barrels of oil), it was later recompleted in the Viola producing to date 8,000 barrels of oil and 140,000,000 cubic feet of gas. A total of thirteen wells have been drilled on this feature through April 2003 with the Petroleum Incorporated Pigg Unit #1 in C SW SE/4 of Section 19 cumming 25,000 barrels of oil and 360,000,000 cubic of gas. Eight of the thirteen wells have been completed as Viola producers including two of the three dry holes later washed down and completed in the Viola. The Stewart Boyer #1 in Section 24-T4N-R2W was a 1st Bromide producer only. Two are currently being completed and the Stewart justice # 1 has a productive 1St Bromide sand behind pipe.
An independent engineering study reports that these wells will have an economic life span of ten to fifteen years and will generate a 3:1 to 5:1 return at today's prices on development costs over and above operational costs. The Pigg #2 recovered its development costs in nine months and the Leo #1 recovered its development costs in eight months. This study concludes that within the boundary of the Thompson Project, oil and gas are trapped in two proven separate reservoirs. Oil and gas trapped in the Viola limestone at a subsurface depth of 4,750 feet to 5,270 feet, covers an area of about 1,320 acres and varies in thickness from 0 to 100 feet. This reservoir appears to contain in the order of 18,000,000 barrels of oil and gas equivalent. The 1st Bromide sand appears to be covering nearly 50 acres containing approximately 435,000 barrels of oil.
Management
Richard F. Porterfield - CEO
Richard F. Porterfield has worked in various capacities throughout his 36 year career in the oil & gas industry. 1973 to 1991 was primarily service oriented owning two geologically oriented companies and evolving to a Staff Geologist for OEXCO, Inc. by early 1991. By 1997 he continued working for OEXCO as a Consultant Geologist reviewing seismic prospects and outside generated deals until he assumed the duties of Senior Geologist for Oak Hills Energy in Ada, Oklahoma by mid 1997 in charge of all exploration and developmental drilling.
After assuming a senior consulting staff position in 1999 with Young Resources, Inc. and Morris E. Stewart Oil Company, he evaluated seismic & subsurface data as Chief Exploration & Developmental Geologist while generating numerous moderate to deep successful oil & gas prospects primarily in the Garvin County area. He successfully merged into another company by 2003 named HoCo, Inc. while performing essentially the same geophysical & geological duties as before eventually drilling several productive wells. During this period as an outside Consultant Geologist, he generated a productive well package utilizing a mix of seismic and shallow subsurface mapping in the North Nocona Oil Field, Nocona, Texas for the Braden Companies in Edmond, Oklahoma.
From March 2005 to December 2008, as a Consultant Geologist, primarily for Bentrock Oil Company, Oklahoma City, Oklahoma, he mapped many moderate to very successful oil & gas properties located in the Garvin County, Oklahoma region.
James Kirby - Chief Financial Officer
James has a broad palette of experience, from directly working within the oil industry in the early 80's to an extensive banking background beginning in 1984 working with such companies as The First National Bank of Shawnee, Bank One, Liberty Bank & Trust, Choctaw State Bank, The Republic Bank of Tecumseh and more. He has held numerous positions within these companies from Vice President, Banking Center Manager and Compliance Officer.
His banking experience has enabled him to work with a broad variety of business enterprises from oil companies to defense contractors and many more. He has helped new companies prosper and helped guide existing businesses to continued success. He studied banking at Seminole College and business at Oklahoma State University.
Sharon Farris - Corporate Secretary - Administrative Assistant
Ms. Farris is an Administrative Assistant to the President and has worked in the oil and gas industry for the past several years. She has worked for Buccaneer Energy Corporation and HoCo, Inc. for the past two and a half years, working with the Oklahoma Corporation Commission, Oklahoma Tax Commission, Petroleum Engineers, Geologist, Landowners, and Attorneys, Crude Purchasers as well as various oil field workers.
Press
MARKET WATCH: Crude, product prices rebound as dollar weakens
Sam Fletcher
OGJ Senior Writer
HOUSTON, June 24 -- Oil futures recovered a portion of earlier losses with the new front-month crude contract rebounding 2.7% June 23 on the New York market in response to a weaker US dollar and concerns about further supply disruptions in Nigeria and in Iran.
The rebound also was helped “by comments from the Organization of Petroleum Exporting Countries Pres. [Jose Maria Botelho de] Vasconcelos reiterating OPEC’s goal to achieve $75/bbl crude by the end of 2009,” said analysts at Pritchard Capital Partners LLC, New Orleans. “His comments followed similar remarks from Saudi Arabia,” they said.
They said, “Both the European Union and OPEC [at a joint conference June 23] suggested higher oil prices were needed to avoid a repeat of the 2008 bubble as both believe higher oil prices are needed to sustain downstream investment. Finally, in the past 2 months, Venezuela has taken actions towards nationalizing their oil production, and the president of Ecuador recently made statements suggesting he is considering nationalization of their oil industry.”
Pritchard Capital Partners said, “If the US dollar continues to fade, strength in crude and commodities should continue; however, it is difficult to envision a major correction in oil considering the backdrop.”
Olivier Jakob at Petromatrix, Zug, Switzerland, said, “The renewed weakness [of] the dollar provided support to oil and the broader commodity complex. In our dollar correlation model, crude oil is valued at $81/bbl, and today the difficulty for oil traders will be to price the result of the [EIA] statistics knowing that they will be followed later by the result of the Federal Reserve meeting.”
While the weaker dollar was “an important contributor” to the support of crude prices, Jakob noted, “We remain as well in an environment where geopolitical concerns are not yet dissipating.” Continued violence in Iran after government and religious leaders refused to overturn the result of a disputed presidential election has prompted stronger criticism from US President Barack Obama about the election's legitimacy.
Jakob observed, “The US Administration is starting to have a stronger voice on the Iranian situation; Iran has expelled British diplomats; and the UK has expelled Iranian diplomats. We also can’t help…notice that two of the British hostages in Iraq (since 2007) were ‘delivered’ dead [June 20.] The US Army is supposed to leave Iraqi cities by the end of this month, and as the West gets louder about its support to the Iranian demonstrators, it is probable that Iran will try to show the West that it is holding a few cards in Iraq and elsewhere (it snubbed at the last minute [June 25] G8 meeting on Afghanistan to which it was formally invited).”
Jakob said, “In Iran itself the streets are not yet clear, and there is growing speculation about the organization of worker’s strike. Attacks on oil installations are not a risk we would consider, but we have to keep in mind what happened to Venezuela and the impact that ‘witch-hunting’ had on production levels. On [June 21] the Iranian deputy oil minister was fired in move widely described as political, and as long as the strife continues, we will keep a premium for the risk of Iranian supplies slowly eroding from witch-hunting and internal disorganization.”
In other news, Eni SPA declared force majeure on shipments of Brass River crude oil from Nigeria. On June 19, Eni shut in 33,000 b/d of oil and 80 MMscfd of gas production from a pipeline supplying the Brass export terminal in the Niger Delta due to sabotage (OGJ Online, June 23, 2009).
In Houston, analysts with Raymond James & Associates Inc. noted since June 18 natural gas prices have steadily trekked lower. “Could the natural gas market finally be reflecting what we expect to be a bearish summer? Perhaps, but we will wait and see,” they said.
Pritchard Capital Partners analysts reported, “Evidence is mounting that LNG will not arrive at US shores. As of June 18, 16 LNG cargoes were scheduled for delivery in the US vs. 18 for the month of May. Reports indicate that since May both China and India have stepped up LNG imports; however, LNG imports in Europe are slowing. Traders suggest watching the August and September the New York Mercantile Exchange futures for signs of weakness and indications of a possible surge in LNG imports to the US.”
US inventories
The Energy Information Administration said June 24 commercial US benchmark light, sweet crudes fell 3.8 million bbl to 353.9 million bbl during the week ended June 19. That far exceeded the Wall Street consensus for a drop of 1 million bbl and differed sharply from an earlier report by the American Petroleum Institute of a bearish 5.9 million bbl increase. US crudes remain above average for this time of year, EIA reported.
During the same week, US gasoline inventories jumped by 3.9 million bbl to 208.9 million bbl, compared with a Wall Street consensus of an increase of 1 million bbl. Distillate fuel increased 900,000 bbl to 152.1 million bbl, in line with Wall Street expectations and above average for this time of year.
Crude imports into the US increased 247,000 b/d to 9.3 million b/d in the latest week. Over the 4 weeks through June 19, US crude imports have averaged 9.2 million b/d, down 628,000 b/d from the same period in 2008. Total imports of both finished gasoline and gasoline blending components averaged 971,000 b/d in the latest week by distillate fuel imports averaged 289,000 b/d.
The input of crude into US refineries increased 354,000 b/d to 15 million b/d, with units operating at 87.1% of capacity. Gasoline production increased to 9.2 million b/d, while distillate fuel production increased to 4.1 million b/d.
The large increase in US gasoline inventories was “due to higher supply and lower demand vs. last week,” said Jacques H. Rousseau, an analyst at Soleil-Back Bay Research. “The average US refinery utilization rate increased to 87.1%, the highest weekly total since Dec. 5. If summer gasoline demand does not materialize, higher production could result in rising gasoline inventories and downward pressure on refining margins,” he said. “On a positive note, jet fuel demand of 1.5 million b/d was the highest weekly total since Mar. 20.”
EIA’s regional data showed rising refinery utilization rates “in all regions except the Gulf Coast.” Rousseau said, “We estimate that the East Coast utilization rate increased to 82%, the highest weekly level since November. …However, gasoline imports into the East Coast remain below average (13% lower than second quarter 2008 levels to date), which has helped prevent a large rise to gasoline stocks in the region.”
Recent PPTO News:
June 15 -
Precision Petroleum Corporation-Acquires 88% of Producing White 12-1 Well, Pottawatomie County, Oklahoma
PRECISION PETROLEUM CORPORATION (OTCBB: PPTO) - Precision Petroleum Corporation (Nevada Company) (the "Company") has completed the purchase of an 88% working interest of the White No. 12-1 Well in Pottawatomie County, Oklahoma.
The Company, in its ongoing endeavour to acquire attractive producing oil and gas leaseholds, was most pleased to conclude this purchase agreement. Richard Porterfield, President of the Company commented that ongoing weekend negotiations concluded in a deal to purchase the White 12-1 well.
The White well produces from the Hunton Limestone oil bearing reservoir. This well was not previously fractured and has been producing from the natural reservoir completion.
At such future time as the reservoir diminishes, the Company will re-enter the hole and fluid fracture the Hunton Zone with a cross leak gel sand frac. This fracture procedure will extend the producing limestone reservoir by an approximate 3 to 4 hundred foot radius beyond the existing flow structure.
The fracture fluid will permeate the Hunton Limestone and substantially increase the porosity of the reservoir. Mr. Porterfield stated that the frac recompletion opportunity was a key consideration during the purchase negotiations. This well has been online for one year and it has previously generated over $200,000 in net profits.
Based on current production records, The White 12-1 produces in excess of 300 barrels per month. Operating and lifting costs are at industry minimums. In addition, the Company has a salt water disposal (SWD) well nearby at its disposal for direct injection. The importance of onsite water disposal facilities is critical for reduced costs and environmental purposes.
Richard Porterfield commented that, "The recent surge in oil prices, now in excess of $70 per bbl has created a lease purchase stampede." Porterfield also states that: "The Company has to date acquired 11 producing leases and will continue to search out further producing locations."
Precision Petroleum Corporation is an independent energy company engaged in the acquisition, exploration and development of oil and natural gas properties in the United States. Precision's objective is to seek out and develop opportunities in the oil and natural gas sectors that represent a low risk opportunity. As well, Precision aims to define larger projects that can be developed with Joint Venture partners. More information about the company is available at: www.precisionpetroleumcorp.com.
Precision Petroleum Corp.
2209 Rushing Meadows
Edmond, Oklahoma73132
Phone: (405) 722-2920
Fax: (405)-728-9600
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
http://www.precisionpetroleumcorp.com
