Page 13 - Sun Resources Annual Report 2013

Sun announced on 12 June 2013 that the Company had
executed a binding agreement with Petro-Hunt LLC to
jointly explore and develop an Area of Mutual Interest (AMI)
consisting of approximately 7,832 acres in northern Leon
County, Texas. Sun and Petro-Hunt will each contribute oil
and gas leases that they own within the area of the AMI for
the purpose of drilling and exploring for oil and gas in the
so called “Dexter” or Woodbine “C” or “Lower Woodbine”
interval of the Woodbine Formation. Sun is contributing
810 net acres (in which it currently has a 100%WI) from
its northern Delta Oil Project acres which lie within the
agreed AMI to the Joint Venture. Petro-Hunt is contributing
2,430 net acres. This transaction sees Sun retain the
same number of net acres by way of holding 100% of
11,010 acres and owning 25% of the 3,240 combined
net acres the subject of the AMI with Petro-Hunt. This
agreement with Petro-Hunt is a significant first step in
the exploration and development of northern acres that
Sun has in its Delta Oil Project. The first well in this AMI is
targeting the Lower Woodbine “C” or “Dexter” sands and
is currently planned to be drilled in the fourth quarter of
2013. Please refer to our tenement directory for detailed
lease information.
Beeler Oil Project: Targeting Upper & Middle
Woodbine (nee Richland, Sun 13.5-16.7%WI)
The Beeler Oil Project was previously known as Richland
Oil Project but was renamed when Amerril assumed the
position of Operator in late February 2013 after a number
of issues. This project comprised Richland Resources,
Steadfast Resources LLC, Amerril and Sun and it involved a
program of horizontal drilling and multi-stage fraccing of the
Upper Woodbine sands (or Woodbine ‘A’ or ‘Harris’ sands).
Drilling operations commenced on 18 August 2012 with
the spudding of the first vertical pilot hole which culminated
in the successful drilling of the Beeler #1H horizontal well.
The working interest parties ultimately agreed to drill and
frac three horizontal wells, plus one vertical well in the
project area; lying immediately adjacent to one of the best
performing horizontal oil wells, Gresham A #1H, in Leon
County, Texas.
The Beeler #1H well was completed with a 16-stage frac
along a 6,100 foot lateral in the Woodbine A. Once in
production, this well was renamed CW Brown #1H. This
well was immediately followed by the second well, John
Beeler #1H which also targeted the Woodbine A sands,
being completed with a 7,300 foot lateral and a 31-stage
frac. The John Beeler #2V well immediately followed the
John Beeler #1H well and targeted the entire prospective
section, from the shallower Sub-Clarksville sand as well
as the entire Woodbine section and underlying Buda
formation. Although oil and gas shows were reported in the
well, and knowing this well is offset by successful horizontal
wells, none of the six fracced intervals in this well flowed oil
or gas. The well was subsequently suspended pending a
future decision on its use, possibly as a new horizontal well
into the Middle or Lower Woodbine.
The third and final horizontal well in the project area was Ellis
#1H and it was chosen for a Woodbine ‘B’ (or “Lewisville)
sand lateral after reviewing the logs from the pilot hole. The
Ellis #1H well completed a 7,700 foot lateral with a 19-stage
frac. All wells were flowed back via natural flow, gas lift and
rod pump, with the Ellis #1H well delivering the best “single
day” initial production rate, or IP rate, of approximately 250
bopd. Paraffin build up interrupted flow back early in the
process but this was rectified with hot oil treatments and use
of an inhibitor. Subsequent to 30 June, Sun and the other
working interest parties continued with clean-up and flow
back operations at the three horizontal Woodbine wells in the
Beeler Oil Project. Oil production continues under the new
operatorship of Amerril with all three horizontal Woodbine
wells now producing oil with jet pumps installed. Almost
14,000 barrels of oil (gross 100%WI) were produced during
the second quarter of 2013 and the latest available average
production rates for July 2013 are summarised below:
Lateral Well Avg bopd % Oil cut
Ellis 140 38%
John Beeler 31 45%
CW Brown 24 52%
Figure 2: Beeler Oil Project lease area showing location of recent horizontal
and vertical wells.
Richland Oil Project
Amerril Oil Project
Beeler #2
Bottom hole location
Graham A #1H
Ellis #1H
John Beeler #1H
CW Brown
(formerly Beeler #1H)
REVIEW OF ACTIVITIES 11